1.Choose the correct statement.
A.Adverse selection arises in health insurance because some of the healthiest people choose to beâ uninsured, at least during their younger years.
B.Moral hazard arises in health insurance because onceâ insured, a person has less incentive to adopt a healthy lifestyle.
C.In the market for healthâ insurance, the buyers have private information and in the market for healthâ care, the sellers have private information.
D.All of the above are correct.
2.Choose the statement that is incorrect.
A.93 million people are covered by Medicare and Medicaid.
B.The government spendsâ $10,387 per person per year on Medicare and Medicaid.
C.About 48 million people limit theirâ health-care costs by using an HMO.
D.The cost of private insurance per person covered is 46 percent of the cost of the government programs.
3.Without knowledge about driverâ types, there isâ _______ equilibrium in the market for car insurance.
A.a pooling
B.an unfair
C.an asymmetric
D.a separating
1.Choose the correct statement.
A.Adverse selection arises in health insurance because some of the healthiest people choose to beâ uninsured, at least during their younger years.
B.Moral hazard arises in health insurance because onceâ insured, a person has less incentive to adopt a healthy lifestyle.
C.In the market for healthâ insurance, the buyers have private information and in the market for healthâ care, the sellers have private information.
D.All of the above are correct.
2.Choose the statement that is incorrect.
A.93 million people are covered by Medicare and Medicaid.
B.The government spendsâ $10,387 per person per year on Medicare and Medicaid.
C.About 48 million people limit theirâ health-care costs by using an HMO.
D.The cost of private insurance per person covered is 46 percent of the cost of the government programs.
3.Without knowledge about driverâ types, there isâ _______ equilibrium in the market for car insurance.
A.a pooling
B.an unfair
C.an asymmetric
D.a separating
