Adverse selection may occur in insurance markets because:

Name: Adverse selection may occur in insurance markets because:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Adverse selection refers to the situation where individuals with a higher risk of making a claim are more likely to purchase insurance. Therefore, the correct choice is C, because those who have the highest risk are most likely to buy insurance. Choice A and B are incorrect because they assume that only one group of people will purchase insurance, which is not necessarily the case.

Adverse Selection May Occur in Insurance Markets Because