How do insurance companies try to reduce: 1) the moral hazard problem; 2) the adverse selection problem?
Insurance companies attempt to reduce moral hazard problems by requiring patients to pay higher deductibles or copayments thereby compelling the insured to share a greater proportion of incurred costs. Insurers can reduce adverse selection risk by limiting the period of open enrollment in health insurance plans, requiring physical exams, and insuring entire groups, thereby ensuring a diversity of health statuses.
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A firm's technology may depend on which of the following factors?
A) the training of its workers B) the skill of its managers C) the speed and efficiency of its equipment D) all of the above
To an economist, slave labor is
a. distasteful, but still the most productive because more output can be produced at alower cost b. considered to be an unskilled labor resource c. a capital good, just as a piece of machinery d. not considered to be a labor resource because it involves coercion e. acceptable as long as a contract exists to address property rights
When goods do not have a price, which of the following primarily ensures that the good is produced?
a. buyers b. sellers c. government d. the market
In a long-run equilibrium, a firm in a monopolistically competitive market operates
a. where marginal revenue is zero. b. where marginal revenue is negative. c. on the rising portion of its average total cost curve. d. on the declining portion of its average total cost curve.