The fact that someone with a high risk of medical problems is more likely to buy a lot of health insurance is an example of
A) adverse selection.
B) monitoring.
C) moral hazard.
D) an optimal contract.

Question

Quizplus · Accepted Answer

The situation described is an example of adverse selection, which occurs when individuals with a higher risk of incurring losses or problems are more likely to seek out or purchase insurance than those with a lower risk. This can create a situation where the insurance pool is comprised mainly of high-risk individuals, driving up costs for the insurer and potentially leading to the collapse of the insurance market.

The Fact That Someone with a High Risk of Medical