Adverse Selection Is

question 3

Multiple Choice

Adverse selection is

• A)when people act differently because they are insured
• B)when more risk averse people want to be insured more
• C)when people at greater risk want to be insured more
• D)when your guess at a test question is wrong

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Definitions:

External Failure Costs

Expenses incurred when products or services fail to meet quality standards after being delivered to the customer, including warranties and returns.

Warranty Costs

Expenses incurred due to fulfilling warranty claims, including repairs, replacements, and service costs associated with guaranteeing the product's performance.

Managerial Time

The allotment and management of time by individuals in managerial positions to achieve organizational objectives effectively.

Assignable Causes

Factors or variables that can be identified and controlled, explaining variations in a process or system.