Okay here we are faced with an equivocation of the word "risk."
Clearly when Melinda says that hazard insurance decreases an individual's risk, she does not mean that hazard insurance decreases the possibility that a risk will occur, i.e. that Jack's house will burn down. Taken in context, Melinda's use of the word risk means that hazard insurance decreases the monetary gamble, i.e. risk, of paying for insurance by judiciously spreading this risk among many policy holders.
Jack misinterprets Melinda's use of the word "Risk" to mean that hazard insurance would actually decrease one's chances of a physical risk befalling on them, i.e. a house burning down. But, that's clearly not what insurance does. Thus, Jack's response clearly trades on the ambiguity of the word risk and its use in the context of insurance, i.e. answer choice (C).
Hope that clears things up!
Julie-VAugust 19, 2019
how can we eliminate the word "decrease" as not being the ambiguous expression? Thanks!
