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university of southern california Operations And Supply Chain Management Assignment Help - insurance company

Question - 1. If a life insurance company knows that smoking increases the risk of death but is unable to
determine which applicants smoke, the problem of _______________ refers to _______________
being more likely to buy insurance.
a. adverse selection, nonsmokers’
b. screening, nonsmokers’
c. adverse selection, smokers’
d. screening, smokers’

2. An insurance company offers doctors malpractice insurance. Assume that settling malpractice
claims against careful doctors costs $5,000 and settling malpractice claims against reckless doctors
costs $30,000. Doctors themselves know whether they are reckless or careful, but the insurance
company can only assume that 10% of doctors are reckless. How much do insurance com ...Read More

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