Adverse selection occurs in the health insurance market because:
A. it is difficult for insurance companies to distinguish between high risk and low risk customers.
B. people cannot predict their future health status.
C. the least healthy people are the least likely to acquire insurance.
D. health care markets are unregulated.
Answer: A
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If demand is unit elastic, revenue
a. and price rise and fall together. b. rises as price falls. c. falls as price rises. d. remains constant as price rises or falls.
Burger Bonanza, a major national burger chain, recently decided to spend $4 million on an advertising campaign featuring a world famous actor to promote its new Bomber Burger. What two benefits are conveyed by the brand name Burger Bonanza?
The conjecture that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and then fall as industry concentration rises is known as the:
A. inverted-U theory of R&D. B. average product of R&D theory. C. bell-shaped-curve theory of product innovation. D. theory of increasing and diminishing returns.