As It Applies to Insurance, the Adverse Selection Problem Is

question 193

Multiple Choice

As it applies to insurance, the adverse selection problem is the tendency for

• A) those most likely to collect on insurance to buy it.
• B) those who buy insurance to take less precaution in avoiding the insured risk.
• C) sellers to price discriminate.
• D) sellers to restrict output and charge high prices.

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Definitions:

Cause Of Action

A set of facts or legal basis that enables one party to sue another.

Province

A principal administrative division of certain countries, especially in Canada, which is characterized by its own government and boundaries.

Defendant Resides

The legal jurisdiction or location where the defendant (the person accused in a lawsuit) lives or is based.

Garnishment

A court order that monies owed to the judgment debtor (defendant) by third parties be paid into court and applied toward judgment debts; also known as attachment of debt.