People Having a Bad Driving Record Find It Difficult to Buy

question 137

Multiple Choice

People having a bad driving record find it difficult to buy automobile insurance because insurance companies fear that ___________ may happen if they raise the premiums.

• A)adverse selection
• B)moral hazard
• C)risk aversion
• D)none of the statements associated with this question are correct

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Definitions:

Production Variation

Fluctuations in the quantity of goods produced, often due to changes in demand or production capacity.

Variable Operating Expenses

Operating costs that vary in proportion to the level of business activity or output, such as sales commissions and utility bills.

Comparative Income Statement

A financial statement that compares the income statements of two or more periods to identify changes in revenues, expenses, and net income.

Sales Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.