Which of the Following Statements Is Correct

question 72

Multiple Choice

Which of the following statements is correct?

• A)A high-risk person is more likely to apply for insurance than a low-risk person because a high-risk person would benefit more from insurance protection.
• B)A low-risk person is more likely to apply for insurance than a high-risk person because a low-risk person would benefit more from insurance protection.
• C)Insurance companies can fully guard against the problem of adverse selection,but they cannot fully guard against the problem of moral hazard.
• D)Insurance companies can fully guard against the problem of moral hazard,but they cannot fully guard against the problem of adverse selection.

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Definitions:

Overly Optimistic

Describes a tendency to hold a rosier outlook than reality might support, often resulting in unrealistic expectations.

Hierarchy Of Goals

A prioritized structure of objectives, ranging from the most immediate and individual to the broad and long-term.

Planning Fallacy

The tendency to underestimate how much time is needed to complete a task, leading to overly optimistic time estimations.

Optimistic Mindset

A mental attitude characterized by hope and confidence in success and positive outcomes.