Which of the following is NOT an example of adverse selection?
A) A family with a home ten feet from a large river buys flood insurance.
B) A company uses the proceeds of a new stock sale to build an unnecessarily luxurious new headquarters.
C) A terminal cancer patient buys life insurance.
D) A company in serious financial trouble offers to pay you 30% on a loan.
B
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The above figure gives your budget line between CDs and magazines. Which of the following changes would NOT allow you to buy more CDs?
A) a decrease in the relative price of CDs B) an increase in income C) a decrease in the price of magazines with no change in the price of CDs D) None of the above answers is correct because all of the above changes allow you to buy more CDs.
Refer to Table 10-6. If Jay can eat all the burgers he wants for free, how many burgers will he consume?
A) 7 burgers B) 6 burgers C) 5 burgers D) 3 burgers