Jim Rhoade Thought He Had a Decent Deal with State

question 37

Multiple Choice

Jim Rhoade thought he had a decent deal with State Farm for insurance coverage on his two cars and his home,but a friend gave him a tip about lower premiums at Allstate. After contacting his local Allstate agent,Rhoade had slashed his annual auto premiums by $400 and his homeowner's premium by the same amount. That's because,in addition to considering Rhoade's record,Allstate took into account seemingly unrelated information from his credit report,such as whether he pays bills on time (he does) and whether there had ever been a claim on his home (there hadn't) . Allstate has discovered patterns that indicate that the better the credit report,the more likely the individual is to be a good risk for an insurer. Which type of pattern has Allstate discovered?

• A)sequence  
• B)association  
• C)predictive  
• D)adjacency

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Definitions:

Regulatory Commission

A government agency or body responsible for enforcing specific laws, regulations, and standards in various sectors, including utilities, telecommunications, and financial markets.

Pure Monopolist

A sole provider of a unique product or service with no close substitutes, giving it the ability to control market prices.

Natural Monopoly

A condition in which a single firm can produce the entire output of a market at a lower cost than what it would be if there were multiple firms.