Which One of the Following Would Provide an Example of Social

question 16

Multiple Choice

Which one of the following would provide an example of social inflation?

• A)Large malpractice awards beyond the level of damages incurred
• B)Increase in costs on auto physical damage claims
• C)Increase in prescription drug cost claims
• D)Losses to repair damages caused by hurricanes in Florida
• E)Rising cost of funeral expenses due to inflation

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Definitions:

Marginal Utilities

The extra pleasure or benefit a consumer gets from purchasing and using an additional unit of a product or service.

Utility-Maximizing

A principle in economics where consumers aim to achieve the highest level of satisfaction with their choices, subject to their income and the prices of goods and services.

Marginal Utility

Marginal Utility represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Diminishing Marginal Utility

A principle stating that as a person increases consumption of a product, there is a decline in the satisfaction or utility they derive from each additional unit.