Figure 14.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. The insurance companies estimate that 40% of its customers are high-cost type. The uninformed side(s) of the market is (are):
A. customers.
B. insurance companies.
C. both customers and insurance companies.
D. neither customers nor insurance companies.
Answer: B
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A) zero. B) $180,000. C) $120,000. D) $20,000.
Credit risk management tools include
A) deductibles. B) collateral. C) interest rate swaps. D) duration analysis.
Which of the following has the highest Herfindahl-Hirschman index?
A) monopoly B) monopolistic competition C) oligopoly D) any of the above, depending on the size of firm sales
A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied
a. True b. False Indicate whether the statement is true or false