An insurance company finds that it insured an adverse selection of largely ill patients. It is forced to increase insurance premiums to reduce losses. How does this aggravate the adverse selection problem?
As insurance premiums increase healthy enrollees are more likely to drop out of the plan. They might opt for cheaper, less generous health insurance plans or for self-insurance. This tendency further aggravates the adverse selection problem.
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One reason why African elephants are endangered is _____
a. the low cost of hunting exhibitions b. exploitation by zoo owners c. many natural predators d. governments often prohibit private ownership
The efficient quantity of a pure public good occurs when the marginal cost of producing that good equals the
A) marginal benefit to the median voter. B) marginal benefit to each individual. C) sum of all individual marginal benefits. D) sum of all individual marginal benefits divided by the number of voters.
The market in which banks lend and borrow reserves from each other for very short periods of time (usually overnight) is the
a. federal funds market b. bond market c. asset based market d. reserve market e. open operations market
An example of contractionary fiscal policy is
A) increasing government spending. B) increasing taxes. C) decreasing government spending. D) decreasing taxes. E) b and c