Which of the Following Wouldhelp to Minimize Adverse Selection

question 89

Multiple Choice

Which of the following wouldhelp to minimize adverse selection?

• A)Having a middleman or specialist to sell used products to consumers
• B)Doing away with the down payment on a loan
• C)Raising the price on a good or service,such as the interest rate on a loan
• D)Eliminating the system of providing a collateral while taking a loan.
• E)Eliminating the system of deductibles in health insurance.

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Definitions:

Total Contribution Margin

The difference between total sales revenue and total variable costs, indicating the total earnings available to cover fixed expenses and generate profit.

Variable Costing

An accounting method that only includes variable production costs (materials, labor, and overhead) in product costs, with fixed overhead expenses treated as period costs.

Net Operating Income

Net Operating Income (NOI) is a measure of a company's profitability from its core business operations, excluding expenses and revenues from financing and investing activities.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.