Because of the Problem of Adverse Selection

question 58

Multiple Choice

Because of the problem of adverse selection,

• A) low-risk individuals may have a hard time finding insurance worth buying.
• B) high-risk individuals may have a hard time finding insurance worth buying.
• C) everyone is typically charged a lower premium.
• D) individuals who buy insurance act more recklessly.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured by GDP.

Simon Kuznets

Simon Kuznets was a Nobel Prize-winning economist known for his work on economic growth and for developing the concept of Gross National Product (GNP).

Quality of Inputs

The standard or grade of raw materials and labor used in the production process, influencing the efficiency and outputs.

Standard of Living

A measure of the wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.