Which of the Following Is a Problem of Adverse Selection

question 90

Multiple Choice

Which of the following is a problem of adverse selection?

• A) The lender has a problem of distinguishing good risk from bad risk borrowers.
• B) The lender has a problem determining that the proceeds from a loan are being used as the borrower stated.
• C) A person takes up the hobby of bungee jumping after purchasing health insurance.
• D) Individuals use more medical services as a result of their purchase of a health insurance plan.

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Definitions:

Equal Wages

The principle or goal of ensuring that employees are paid the same amount for the same work, regardless of gender, race, or other potentially discriminatory factors.

National Sales Tax

A tax applied to the sale of goods and services at the national level.

Tariff Rates

Import duties, also known as tariff rates, are financial charges applied to imported goods, influencing trade and economic policies.