Which of the following best describes the adverse selection problem in health care?
A. The poor are exposed to medical disasters because they cannot afford to pay for insurance.
B. Healthier people are less likely to buy health insurance because they are less likely to need it.
C. The people who are selected for jobs with health insurance benefits are often the people who least need the health insurance.
D. People don't know how much they will need to pay for health care in old age, adding to the risks of old age.
Answer: B
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Consumer surplus in a market for a product would be equal to the area under the demand curve if
A) the product was produced in a perfectly competitive market. B) marginal cost was equal to the market price. C) the market price was zero. D) producer surplus was equal to zero.
Refer to Figure 6-12. The diagram shows two supply curves, SA and SB. As price rises from P0 to P1, which supply curve is more elastic?
A) They are equally inelastic. B) SB C) They are equally elastic. D) SA
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A) created a market for pollutants. B) sets a cap on the amount of pollutants in each country. C) allowed firms to benefit from emitting pollutants. D) sets the amount of per-unit tax on each pollutant.
The combination of personal computers and televisions shown in the figure above by point W
A) is an efficient use of society’s resources because it is below the production possibilities curve. B) is more desirable than point X because producing at point W does not put a strain on society’s resources. C) is attainable but involves the inefficient use of some of society’s resources. D) is beyond the capacity of society to produce.