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- Subject
- Marketeconomics-mcqs › market
- Published
- 31 May 2019
- Last updated
- 28 May 2026
Explanation
Adverse selection occurs when those with higher risk are more inclined to obtain insurance, leading to an imbalance in the insured pool. This differs from moral hazard, which involves changes in behavior after obtaining insurance, and risk aversion, which is the preference to avoid risk.
More Market MCQs
Practice related questions from the same subject.
- 1.Broadcasting firms use satellite TV subscriptions and signal detection tools primarily to combat which issue?
- 2.Which of the following is a classic example of a public good?
- 3.Which of the following factors can lead to market failure?
- 4.When a neighbor burns yard debris and smoke enters your home, what type of externality does this represent?
- 5.Why is a competitive equilibrium considered Pareto efficient?
- 6.In a Nash equilibrium, how does each player select their strategy?
- 7.In a contestable market, how must existing companies act to prevent new competitors from entering?
- 8.Which of the following is NOT classified as a form of imperfect competition?
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