Insurance: Paying Someone to Assume Your Risks

Insurers reduce risk by categorizing the population into different risk groups and charging premiums accordingly.

That's why safe drivers pay lower car insurance premiums compared to their reckless counterparts. Similarly, office workers pay lower premiums for occupational injury insurance compared to professional snowboarders or construction workers.

Production is a fundamental aspect of economics that involves using scarce resources to create new output.

Efficient economies maximize output by minimizing waste and effectively utilizing scarce resources, ultimately determining a country's living standards.