As healthy people leave an insurance pool, premiums rise, which cause more people to leave the pool and even higher premiums. This describes
A) moral hazard.
B) the reversibility paradox.
C) irrational pricing.
D) a premium death spiral.
D
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What is the relationship among the following variables for a perfectly competitive firm: the market price, average revenue and marginal revenue?
A) As a firm lowers the market price to sell more output, marginal revenue and average revenue will be less than the market price. B) Average revenue is equal to marginal revenue; average revenue is greater than the market price. C) The market price is equal to both average revenue and marginal revenue. D) Average revenue is equal to the market price; average revenue is greater than marginal revenue.
Refer to Figure 14.1. Other things equal, an increase in transfer payments is best represented as a movement from
A) point A to point B. B) point B to point A. C) point C to point A. D) point B to point C.
The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals
a. True b. False Indicate whether the statement is true or false
Comparative advantage in production of the good measured on the horizontal axis is identified with a straight-line production possibilities frontier that has a slope that is
A. positive. B. larger in magnitude (or absolute value) and positive. C. larger in magnitude (or absolute value). D. smaller in magnitude (or absolute value).