The Problem of Adverse Selection

question 79

Multiple Choice

The problem of adverse selection

• A)implies that many people who do not need insurance coverage have it through group plans.
• B)means that those people who apply for insurance are the least likely to need insurance coverage.
• C)causes insurance underwriters to alter the health statistics of the general population when determining appropriate premiums.
• D)creates a savings element along with the insurance component of the premium and policy.

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Definitions:

Assembling

The process of putting together parts or components to build a product or structure.

Swing Sets

Outdoor play equipment consisting of a frame from which swings are suspended, commonly found in playgrounds and backyards.

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Typing

The process of inputting text by pressing keys on a typewriter, computer keyboard, or mobile device.