1. A poor applicant pool represents an adverse selection problem when: 2. In ord
ID: 1097180 • Letter: 1
Question
1.
A poor applicant pool represents an adverse selection problem when:
2.
In order to reduce the undesirable effects of adverse selection, an insurance company can:
3.
Smokers being more likely to buy life insurance is an example of:
4.
A difference between moral hazard and adverse selection is that:
5.
Which is a solution to an adverse selection problem:
6.
Which of these is an example of adverse selection :
7.
Which of these is NOT an example of potential solution to an adverse selection problem:
8.
Which of these is an example of adverse selection:
9.
Your choice of supplier may be better able to supply high quality goods than other candidate suppliers if:
10.
Which of these is not a mechanism to deal with adverse selection:
1.
A poor applicant pool represents an adverse selection problem when:
a. The compensation of those hired is not tied to their evaluation b. The annual evaluation of those hired does not include measures of how hard they work c. Those hired are not adequately monitored d. Those hired are not properly screened2.
In order to reduce the undesirable effects of adverse selection, an insurance company can:
a. Introduce a deductible AND classify clients into different types according to their history b. Reject the renewal of policies of those people with really bad records c. Introduce a deductible d. Classify clients into different types according to their history3.
Smokers being more likely to buy life insurance is an example of:
a. Risk aversion b. Asymmetric information c. Adverse selection d. Moral hazard4.
A difference between moral hazard and adverse selection is that:
a. Adverse selection does not imply unconsummated wealth opportunities b. Adverse selection can be addressed by incentive clauses c. Adverse selection refers to post-contractual information asymmetries d. Adverse selection refers to pre-contractual information asymmetries5.
Which is a solution to an adverse selection problem:
a. Prospective secretaries must take a typing test before being hired b. Installing engine monitors to track driving habits of the insured c. Insurance companies require homeowners to have smoke detectors d. Rearview cameras in cars6.
Which of these is an example of adverse selection :
a. Drivers become more reckless after they buy insurance b. Reckless drivers opt for more airbags c. Car owners with insurance fail to look their cars d. Football players tackle 'head first' because their helmets are so good7.
Which of these is NOT an example of potential solution to an adverse selection problem:
a. Job candidates wearing their bet suit and polished shoes at interviews b. Employers putting spyware on computers to monitor Internet browsing c. Auction sites offering escrow services d. A 90 day probationary period during which new hires can be fired without recourse8.
Which of these is an example of adverse selection:
a. Insurance companies require homeowners to have smoke detectors b. Warehouse employees who wear hernia belts lift greater weights c. The winning bidder for a contract that you let failed to divulge that his certification has lapsed d. Consumers celebrate new heart medication breakthroughs by splurging on high fat ice cream9.
Your choice of supplier may be better able to supply high quality goods than other candidate suppliers if:
a. He has little of his own wealth tied up in the deal b. His cash flow has been negative and he is in danger of having to close c. He has sought, and advertises, all of the difficult certifications he has earned d. He has developed a strong sense of risk aversion10.
Which of these is not a mechanism to deal with adverse selection:
a. A 90 day probationary period during which new hires can be fired without recourse b. Insurance companies require blood tests before writing a policy c. Prospective secretaries must take a typing test d. Employers putting spyware on computers to monitor Internet browsingExplanation / Answer
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