Which of the Following Is an Example of Adverse Selection

question 11

Multiple Choice

Which of the following is an example of adverse selection?

• A)A homeowner with a large fire insurance policy allows the wiring in her house to deteriorate.
• B)A woman with a large life insurance policy takes up sky diving.
• C)Your brother-in-law borrows $20,000 from you to open a pizza parlor, but spends it gambling at the racetrack instead.
• D)A man with a bad heart condition buys a large life insurance policy.

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Definitions:

Social Networking

The use of internet-based platforms that enable individuals to interact, share information, and develop social and professional contacts.

Walter Cannon

An American physiologist known for his work on the fight or flight response and for coining the term "homeostasis."

Stomach Contractions

The involuntary movements of the stomach muscles that mix and propel contents through the digestive system.

Ghrelin

A hormone produced mainly by the stomach that stimulates appetite and signals hunger to the brain.