Why do health insurance companies ask their potential customers to submit their previous medical records?
What will be an ideal response?
Customers of health insurance companies have better information about their health conditions than do the insurers. In order to reduce this information asymmetry, potential customers are often asked to submit their previous medical records. This is an example of signaling by customers.
You might also like to view...
The U.S. and the Canadian currencies are the only two in the world that are called "dollars."
Indicate whether the statement is true or false
Suppose the production of VCRs can be represented by the following production function: q = L0.4 K0.4. Which of the following statements is (are) TRUE?
A) The production function has decreasing returns to scale. B) The marginal productivity of labor falls as labor increases in the short run. C) Capital and labor can be substituted for one another. D) All of the above.
Which of the following is included in GDP, but may not have been economically beneficial?
a. Building schools b. Water treatment plant construction c. Residential alarm installations d. Airport construction
Consider the labor market for short-order cooks. An increase in immigration will cause
a. both equilibrium wages and equilibrium employment to increase. b. both equilibrium wages and equilibrium employment to decrease. c. equilibrium wages to increase and equilibrium employment to decrease. d. equilibrium wages to decrease and equilibrium employment to increase.