When People Who Buy Insurance Change Their Behavior After the Purchase

question 157

Multiple Choice

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of

• A)moral hazard.
• B)adverse selection.
• C)asymmetric information.
• D)economic irrationality.

Understand the role of sensitivity and expected value analysis in managing the uncertainty in estimates.

Apply capital rationing in the context of allocating funds among various capital investment proposals.

Analyze the average rate of return on investment for capital projects.

Understand the concept and significance of Net Present Value (NPV) in evaluating capital investments.

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Definitions:

Harriet Martineau

A British social theorist and writer who is often considered the first female sociologist for her significant contributions to the field.

Latent Functions

Refer to the unconscious or unintended consequences of social processes, beneficial for the smooth operation of society.

Sociology

Sociology is the study of social life, social change, and the social causes and consequences of human behavior.

Male Domination

A societal condition where males hold primary power, leading to dominance over females in various sectors such as politics, employment, and family life.