Suppose a Health Insurance Company Notes That Almost All of Its

question 113

Multiple Choice

Suppose a health insurance company notes that almost all of its customers are at a high risk of illness or injury. This is an example of

• A) public information.
• B) perfect information.
• C) a thick market.
• D) an adverse selection problem.

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Definitions:

Voidable

A legal term for a contract or transaction that, while valid, may be annulled or rescinded by one of the parties due to certain conditions such as fraud, duress, or mistake.

Mutual Assent

An agreement between two or more parties manifested by an offer and acceptance, which forms the basis of a contract.

Legality

Conformity with the law or adherence to lawful requirements.

Competent Parties

Individuals or entities that have the legal capacity to enter into a contract, including being of legal age and sound mind.