1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
svetlana [45]
2 years ago
10

The state of California set up its own earthquake insurance program for homeowners in 1997. The rates vary by ZIP code, dependin

g on the proximity of the nearest fault line. However, critics claim that the people who set the rates ignored soil type. Some houses rest on bedrock; others sit on unstable soil. What are the implications of such rate setting?
A. This rate setting scheme creates a moral hazard problem: Homeowners with houses on unstable soil are less likely to purchase insurance because the rate is much higher for them.
B. This rate setting scheme creates a moral hazard problem: Homeowners with houses on unstable soil are more likely to purchase insurance than homeowners
C. This rate setting scheme creates an adverse selection problem: Homeowners with houses on unstable soil are less likely to purchase insurance because the rate is much higher than for them.
D. This rate setting scheme creates an adverse selection problem: Homeowners with houses on unstable soil are more likely to purchase insurance than much higher for them. with houses that rest on bedrock. rate is much higher for them homeowners with houses that rest on bedrock.
Business
1 answer:
ra1l [238]2 years ago
6 0

Answer: This rate setting scheme creates an adverse selection​ problem: Homeowners with houses on unstable soil are more likely to purchase insurance than homeowners with houses that rest on bedrock

Explanation:

California has its own earthquake insurance program for homeowners and the rates vary by the ZIP code, which depends on the proximity of nearest fault line.

However, critics claim that the people who set the rates ignored soil type. Some houses rest on bedrock while others sit on unstable soil. If the soil type is used, rate setting scheme creates an adverse selection problem.

An adverse selection problem is tendency of those in high-risk areas to purchase the insurance claim because there are higher chances they may get affected. Therefore, the homeowners with houses on unstable soil will more like buy insurance than the homeowners with houses that rest on bedrock.

You might be interested in
I WOULD LOOOOVE IF SOMEONE COULD ANSWER THIS RIGHT AS SOON AS THEY CAN !!!!!!The taxpayer identification number for partnerships
xz_007 [3.2K]

Answer:

EIN; employer idenification number.

Explanation:

hope this helps :)

5 0
3 years ago
Read 2 more answers
Because costs and benefits are both subjective, a person's cost-benefit analysis will always be based on what?
Allisa [31]

Answer: his or her unique values and benefits

Explanation: I just got it right

4 0
2 years ago
Read 2 more answers
Which of the following housing decisions provides a person with both
Lana71 [14]
C selling a share in cooperative
3 0
3 years ago
Read 2 more answers
Kareem bought a rental house in March 2014 for $300,000, of which $50,000 is allocated to the land and $250,000 to the building.
Bingel [31]

Answer: See explanation

Explanation:

a. What is Kareem's realized gain or loss?

Amount realized from sale = $330,000

Less: adjusted basis for house and land = $269000

Less: tennis court adjusted basis = $6200

Realized gain = $54700

b. What is the adjusted basis of the rental house and land at the time of the sale?

Original land basis = $50000

Add: Original house basis = $25000

Less: Depreciation = $30900

Adjusted basis = $269100

c. What is the adjusted basis of the tennis court at the time of the sale?

Tennis court original basis = $7500

Less: Depreciation = $1300

Adjusted basis of the tennis court = $6200

d. If the buyer takes the property subject to the $80,000 mortgage, rather than assuming it, what is Kareem's realized gain or loss?

Amount realized = $330000 + $80000 = $410,000

Less: Adjusted basis for house and land = $269100

Less: Adjusted basis of tennis court = $6200

Realized gain = $134700

3 0
3 years ago
A balance is _____.
Serggg [28]

Answer:

money you pay banks

Explanation:

8 0
3 years ago
Other questions:
  • n autarky, suppose that equilibrium sugar price is $100 per ton in Birdonia, a small agricultural nation. Now, suppose Birdonia
    5·1 answer
  • Marketers often scan social media to learn more about what customers think. __________ is a technique in which data from a varie
    5·1 answer
  • The central bank of the united states is often called the banks' bank. what is it
    13·2 answers
  • John is a 45-year-old manager who enjoys playing basketball in his spare time with his teenage sons and their friends. at work h
    6·2 answers
  • Domingo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the f
    13·1 answer
  • Accounting Professionals Inc. experienced the following events in 2014, its first year of operation:1. Performed services for $2
    14·1 answer
  • Pretax accounting income for the year ended December 31, 2021, was $53 million for Truffles Company. Truffles' taxable income wa
    7·1 answer
  • Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below.
    5·1 answer
  • What is an example of a good stock to buy during economic expansion?
    15·1 answer
  • A business-level strategy is: a. a marketing and positioning program designed to explain a business to its customers. b. an inte
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!