Which of the Following Actions Best Illustrates Adverse Selection

question 76

Multiple Choice

Which of the following actions best illustrates adverse selection?

• A)A person adds risky stock to his portfolio.
• B)A person who has narrowly avoided many accidents applies for automobile insurance.
• C)A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
• D)A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.

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Definitions:

Peripheral Nervous System

The Peripheral Nervous System consists of the nerves and ganglia outside of the brain and spinal cord, involved in transmitting information to and from the central nervous system.

Central Nervous System

The Central Nervous System consists of the brain and spinal cord, serving as the primary processing center for the entire nervous system.

Dendrites

Branch-like extensions of a neuron that receive signals from other nerve cells and are key players in neural communication.

Neuron

Morphologic and functional unit of the nervous system, consisting of the nerve cell body, the dendrites, and the axon; also called nerve cell.