Which of the Following Is an Application of the Adverse-Selection

question 7

Multiple Choice

Which of the following is an application of the adverse-selection problem?

• A)a customer driving more recklessly after buying car insurance.
• B)a teenager "hanging out" with friends his or her parents do not approve of.
• C)shareholders offering a high-powered incentive contract to a manager.
• D)an auto repairman claiming that the repairs are more extensive than they actually are.

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Definitions:

Court Action

A legal proceeding in which a plaintiff brings a lawsuit against a defendant in court, seeking a legal remedy.

Judicial Review

The process by which a court examines the actions of the executive and legislative branches to ensure they comply with the constitution or other guiding legal principles.

Prerogative Writs

Special orders issued by a higher court to a lower court or public authority to perform or refrain from doing a specific act.

Historical

Pertaining to or dealing with events or conditions of the past.