Risk Pooling

question 109

Multiple Choice

Risk pooling:

• A)reallocates the likelihood of catastrophes happening.
• B)reallocates the costs of catastrophes when they occur.
• C)diversifies the risk of catastrophes occurring.
• D)gathers individuals with similar risks and pools them together.

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Definitions:

Isocost Line

A line that represents all combinations of inputs which cost the same total amount.

Capital

Resources, such as equipment, buildings, and machinery, used in production to create goods and services.

Labor

The human effort, both physical and mental, that is used in the production process to create goods and services.

Slope

In mathematics and economics, the measure of the steepness or incline of a line, often used to describe changes in variables in relation to one another.