Which of the Following Is an Example of Adverse Selection

question 35

Multiple Choice

Which of the following is an example of adverse selection?

• A)The foulest-tasting medicine is often the most effective.
• B)Having secured a loan,a business manager is more likely to have a lavish office party than to buy new equipment.
• C)The clientele at a low-price restaurant are unlikely to leave generous tips.
• D)The shiniest packaging often contains disappointment.

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Definitions:

Defence Mechanism

Psychological strategies used unconsciously to protect oneself from anxiety or internal conflicts.

Rationalization

The cognitive process in which individuals justify behaviors or decisions that may otherwise be unacceptable, often by creating a seemingly logical reason for them.

Defence Mechanism

Unconscious psychological strategies brought into play by various entities to cope with reality and to maintain self-image.

Rationalization

The process of providing a logical, plausible, and socially acceptable explanation for behaviors that might otherwise be perceived as irrational.