Which of the following is NOT an example of the adverse selection problem?

A. Buyers in a market for used cars must choose from an undesirable selection of used cars.
B. An insurance company must choose one price for its coverage for both high-cost and low-cost people.
C. Commercial banks would rather use credit rationing than raising interest rates in the presence of excess demand for loans.
D. An insured motorist drives more recklessly.


Answer: D

Economics

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