An indication that Insurance companies anticipate adverse selection is
a. they require a deductible
b. they do not classify clients into different risk types according to their claim history
c. they do not classify clients into different risk types according to pre-existing conditions
d. they do not require a co-payment
QUESTION 2Supplier power is high when
a. Suppliers are concentrated
b. The inputs provided are critical
c. The inputs provided are unsubstitutable
d. All of the above
QUESTION 3The following is not an example of adverse selection
a. you lock your garage when you have expensive workshop tools
b. you are less careful when you buy a more expensive car
c. Individuals tend to gamble more with their money when the future is certain
d. you only go swimming when the lifeguard is on duty
QUESTION 4Supplier power tends to be low when
a. Suppliers are less concentrated
b. Inputs provided by the supplier are not vital
c. Inputs are homogenous
d. All the above
QUESTION 5Adverse selection in insurance implies that
a. all people face the same risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are not risk averse
d. insurers cannot tell the risk levels that different individuals face
QUESTION 6The resource based perspective indicates that firms exhibit different performances within the same industry because
a. Some firms have better resources than others
b. Some firms have organizational structures that can be duplicated
c. Some firms sell goods that have a more elastic demand
d. Some firms sell goods that have a perfectly elastic demand
QUESTION 7Adverse selection in insurance requires that
a. all people face the same risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are risk averse
d. insurers can tell higher risk people from lower risk people