Asked by Krystina Marschall on Jun 04, 2024

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​Which firm is not dealing with adverse selection

A) ​a manufacturer requires a 90 day probationary period for new employees
B) a temporary clerical agency requires a typing test
C) a manufacturer contracts with suppliers regardless of ISO 9000 status
D) ​Smokers get the worse life insurance rates as non-smokers

Adverse Selection

A situation in which sellers have information that buyers do not have, or vice versa, affecting the quality of goods or services offered.

Probationary Period

A trial period at the beginning of employment during which an employer can evaluate an employee’s performance and fit with the company.

ISO 9000

A set of international standards for quality management and quality assurance designed to help companies ensure they meet customer and other stakeholder needs.

  • Acknowledge the concept of adverse selection and its importance for the insurance market.
  • Distinguish between high risk and low risk clients and their treatment in the insurance market.
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ZK
Zybrea KnightJun 04, 2024
Final Answer :
C
Explanation :
The manufacturer contracting with suppliers regardless of ISO 9000 status is not dealing with adverse selection because they are not making a decision based on imperfect information or asymmetry of information. ISO 9000 certification is a quality management system certification which may or may not be important to the manufacturer depending on their specific needs and priorities.