​The _____ Principle Recognizes That a Large Percentage of a Product's

question 79

Multiple Choice

​The _____ principle recognizes that a large percentage of a product's revenue stream is generated by a relatively small,loyal portion of total customers.

• A)​80/20
• B)​Pareto
• C)​parity
• D)​loyalty

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Definitions:

Adverse Selection

A situation in economics where one party in a transaction has more or better information compared to the other party, potentially leading to an inequitable outcome.

Unobservable Characteristics

Traits or factors not immediately apparent or measurable that can influence outcomes or decisions.

Unobservable Actions

Actions taken by individuals or entities that cannot be directly observed or monitored, often leading to issues of information asymmetry.

Moral Hazard

A situation in insurance and economics where one party is more likely to take risks because they do not bear the full consequences of their actions, often due to asymmetric information.