Robert applied for health insurance but did not mention in the application form that his family has a history of heart ailments that are considered to be hereditary. What will happen if several customers like Robert purchase the insurance?
What will be an ideal response?
A person like Robert with a family history of heart ailments is more likely to fall ill. Insurance companies require higher premiums to cover the health expenses of such high-risk individuals, but if premiums are high, a person with a lower chance of falling ill will not buy the insurance. If several customers like Robert buy the insurance, the premium will continue to rise, forcing all low-risk individuals to stay out of the market. This is an example of adverse selection in the insurance market.
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Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. 
If Lee chooses aggression, Cody will respond with ________, and if Lee chooses cooperation, Cody will respond with ________.
A. cooperation; aggression B. aggression; cooperation C. cooperation; cooperation D. aggression; aggression
Barter is
a. illegal in the United States b. an efficient system of exchange c. most useful when there is much specialization and international trade d. only possible if money is used as a medium of exchange e. the direct exchange of goods, without the use of money
Economic progress
A) reflects that people are achieving higher income levels and living standards. B) requires that individuals work longer hours. C) indicates that scarcity is no longer a problem. D) indicates income levels are higher even though environmental and health conditions have worsened.
The price that a monopolistically competitive firm will charge depends on what its competitors charge.
Answer the following statement true (T) or false (F)