Which of the Following Statements About Liability Losses Is True

question 3

Multiple Choice

Which of the following statements about liability losses is true?

• A) They arise from two sources: the obligation to pay legal damages, and the resulting bad publicity.
• B) The obligation to pay legal damages is always more expensive than the cost of defense.
• C) Defense costs can be expensive, unless the court finds that the plaintiff's claims are groundless.
• D) None of the above is true.

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Definitions:

Unit Elastic

A situation in which the quantity demanded or supplied changes by an equal percentage as the change in price.

Price Elasticity

A measure of how much the quantity demanded of a product changes in response to a change in the product's price.

Demand

The consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service.

Price Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly due to changes in its price. Highly elastic means a small price change makes a big difference in demand or supply.