Which of the Following Actions Best Illustrates Adverse Selection

question 32

Multiple Choice

Which of the following actions best illustrates adverse selection?

• A)A person purposely chooses bonds of corporations with high default risk because of the high returns.
• B)A person dislikes losing $400 more than he likes winning $400.
• C)After obtaining automobile insurance a person drives less carefully than before.
• D)A person intending to take up dangerous hobbies applies for life insurance.

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Definitions:

Infectious Diseases

Illnesses caused by pathogens such as bacteria, viruses, fungi, or parasites, that can spread directly or indirectly from one individual to another.

Chronic Diseases

Long-term health conditions that persist for months or years, often incurable but can be managed through treatment and lifestyle changes.

Period Of Time

A duration in which events occur, ranging from seconds to millennia.

Health Care Costs

Expenses related to medical services, including prevention, treatment, rehabilitation, and health insurance.