Figure 9.6 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. If the insurance companies set the price equal to their average cost per customer, what type of customers will dominate the market?
A. low-cost customers
B. high-cost customers
C. Both types equally split the market.
D. There is not sufficient information.
Answer: B
You might also like to view...
Suppose the CPI in 1950 was 24.1 and the CPI in 1975 was 53.8 . When Ken's income rose from $10,000 per year in 1950 to $20,000 per year in 1970, Ken's standard of living improved between 1950 and 1970
a. True b. False Indicate whether the statement is true or false
Expansionary monetary policy will only temporarily depress interest rates in a basic proposition of the __________ school.
Fill in the blank(s) with the appropriate word(s).
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.
Refer to the above table. The production of this good has been through the first 3 stages of production. What is the total value added in Stage 1 through 3?
A. $0.75 B. $0.07 C. $0.43 D. Cannot be computed without more information.