Government Intervention Is Frequently Justified in Insurance Markets Due to the Presence

question 52

Multiple Choice

Government intervention is frequently justified in insurance markets due to the presence of market failures caused by:

• A) adverse selection and competitive screening.
• B) competitive screening and competitive signaling.
• C) over-signaling and under-screening.
• D) advantageous selection and market unraveling.

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Definitions:

Consumer Goods

Products produced for purchase by individuals and households for personal use, such as clothing, food, and electronics.

Industrialize

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods.

Market-Oriented Economy

An economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Reforms

Changes made to improve a system, law, institution, or practice that are often enacted in response to instances of inefficiency or injustice.