Less skillful drivers are more likely to buy auto insurance with lower deductibles. Economists use this as an example of:

A. information optimization.
B. adverse selection.
C. asymmetric selection.
D. moral hazard.

Answer: B

Economics

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An escalation or automatic adjustment provision in a purchase contract for some good deters opportunistic behavior and automatically reallocates risk as its price changes

Indicate whether the statement is true or false

Economics

Which of the following industries most closely approximates pure competition?

A. Agriculture. B. Farm implements. C. Clothing. D. Steel.

Economics