Which of the following actions best illustrates adverse selection?
a. A person purposely chooses bonds of corporations with high default risk because of the high returns.
b. A person dislikes losing $400 more than he likes winning $400.
c. After obtaining automobile insurance a person drives less carefully than before.
d. A person intending to take up dangerous hobbies applies for life insurance.
d
You might also like to view...
If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is
A) more than 8 chairs. B) zero. C) negative. D) less than 8 chairs.
Suppose there currently is an inflationary gap. What could the government do to bring the overall price level down?
A) nothing B) Reduce government spending. C) Increase government spending. D) Reduce the nation's aggregate supply.