Adverse selection in insurance business means that those__________ likely to get _________insurance benefits want to purchase insurance the most. Group of answer choices most; large least; small least; large most; small not; any
Q: The size of the uninsured and underinsured population in the United States has become an indication…
A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…
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A: Given : Consumer Demand : Q = 100 – PP PL = $70
Q: For each of the following kinds of insurance, give anexample of behavior that reflects moral hazard…
A: Moral hazard is a situation in which a person involves in some risky event by knowing that his/her…
Q: A deductible reduces ________ in exactly the same way as ________. Question 10 options: a)…
A: When talking about deductibles, it is the amount of money that an individual pays in advance to get…
Q: An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he…
A: The probability that the person will get sick is 0.1 percent. The income of the individual is given…
Q: Suppose the probability that Recall Scarlett is sued is .1 and her income is 1000. In the case, she…
A: Demand refers to the desire of consumers to buy goods and services at certain prices. Demand can…
Q: Consider the setup from Questions 1 and 2. How much profits, in expectation, does the insurance…
A: "Expected utility" is an economic phrase that describes the utility that an entity or the overall…
Q: Consider an insurance contract with the premium r=$200 and payout q=$800. a.) John has…
A: a. Fair contract premium can be calculated by using the following formula.
Q: Multiple Choice Adverse selection describes a situation where an individual's demand for insurance…
A: In a market, there are various activities that results in market failure, such that externality,…
Q: Suppose in a given state's new insurance marketplace, with community rating and no restrictions on…
A: When one of the insurers is allowed to charge any premium to the people and also allowed to exclude…
Q: In order to remain competitive, insurance companies must successfully address: A. Adverse…
A: Adverse selection refers to th situation where one party know more information than the other party…
Q: Adverse selection is... a. Asking a private pilot about the safety of his plane. b. Purchasing more…
A: Adverse selection is the problem of asymmetric information where one party does not have complete…
Q: In a standard economic analysis, setting a higher copayment rate per day of hospital care 1) Has…
A: ANS A copayment for an insurance plan is a flat rate that the insured need to pay for obtaining a…
Q: producer collects he initial premium for a healih policy and gives he applicant a conditional…
A: As indicated by the Health Insurance Association of America, health care coverage is characterized…
Q: Fun with cost-sharing. An important distinction in health insurance is between the list price (PL)…
A: The axes are presented in the figure. Price has been labelled in the y-axis and quantity as the…
Q: Indicate whether the statement is true, false, or unclear, and justify your answer.Moral hazard is…
A: False, because moral hazard can occurs in any insurance contract, even exterior the perspective of…
Q: Why is survival time considered to be a good indicator of health status? A. It measures health…
A: Survival time is considered to be a good indicator of health status because it measures the accounts…
Q: In the RAND study, two plans had full coverage for spending within the hospital, but one had a $150…
A: Here, note that this incentive patients are bound to utilize ambulatory care since it somes cash and…
Q: may arise. This is when _____. A. Bismarck; insurers seek out healthy customers. B. Beveridge;…
A: The Bismarck and beveridge are two popular health care systems where the two different methods of…
Q: annual earned income and U(W) = (W/10)0.5 is this individual’s von Neumann-Morgenstern utility index…
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Q: Insurance Diagram Total Utility E U(W-L) B W-L P(W-L)+(1-p)W Expected If an insurance company…
A: * ANSWER :- By using given data the matching are given below
Q: Which of the following examples describe the "adverse selection problem"? ntara contoh berikut, yang…
A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…
Q: RAND study, two plans had full coverage for spending within the hospital, but one had a $150…
A: The RAND concentrate on tried whether hospital c and outpatient care are supplements or substitutes.…
Q: Suppose there is a 50–50 chance that a risk-averse individual with a current wealth of $20,000 will…
A: Current wealth of the person= $20000 Loss suffered by him if he contract a debilitating disease=…
Q: When focused on the youngest age group, a 20% increase in medical spending is associated with:…
A: Elasticity of health with respect to medical spending measures the responsiveness in health…
Q: S1: A pandemic knows no issue of race, religion, language or even wealth. S2. Response to pandemic…
A: lets see in the step to that How does Covid-19 affect the Economic, cultural, social, and political…
Q: Suppose the equilibrium price for good quality used cars is $20,000. And the equilibrium price for…
A: Adverse selection occurs when one party to a contract has more information than the other. Here the…
Q: An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he…
A: Given, Income if person does not get sick = M = 40,000 Utility (M) = 200 Probability of getting sick…
Q: Individuals will prefer to fully insure against a potential adverse event if A. individuals are…
A: In a market, people have individual differences and different behaviour to make an exchange based on…
Q: 1) Suppose Al has an income of $25,000 and faces a 20% chance of having a serious medical problem…
A: While taking a medical insurance plan, there are several factors which must be taken into account.…
Q: Suppose there are two types of people, high ability and low ability. A high-ability person's…
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Q: Short questions a. Describe the first and second Welfare Theorem b. Describe the difference…
A: Welfare economics is a discipline of economics that employs microeconomic approaches to assess…
Q: Benefits are payable in a Critical Illness Plan for which of the following situations or illnesses?…
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Q: Ralph is choosing whether to purchase health insurance. Here are the features that define his…
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Q: Assume your utility over income is U=T and you have a 10% chance of getting sick. Your income when…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Government provided social insurance is most beneficial in the cases where the probability of…
A: Social insurance provides safety against risks that the private insurance market fails to deal with.…
Q: Moral Hasard and Insurance The utility is U = W1/2 − 350S + 95S1/2 ; where W is wealth and S is…
A: GIVEN Moral Hasard and Insurance The utility is U = W1/2 − 350S + 95S1/2 ; where W is wealth and…
Q: Tess and Lex earn $40,000 per year and all earnings are spent on consumption (c). Tess and Lex both…
A: The total income of Tess and Lex = $40,000 The average probability that Tess and Lex experience…
Q: A government policy aimed at protecting people against the risk of adverse events is called
A: There are various policies enacted by the government which are for the benefit of the people.…
Q: Albert owns a car worth MOP 50,000 which can get stolen with probability 1%. He could purchase…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Mary is an 18-year-old student who recently bought a used car Mary is looking to buy car insurance…
A: When one party has more information than the other, there is always asymmetric information, which…
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- Scenario 2 Tess and Lex earn $40,000 per year and all earnings are spent on consumption (c). Tess and Lex both have the utility function (sqrt c) . Both could experience an adverse event that results in earnings of $0 per year. Tess has a 1% chance of experiencing an adverse event and Lex has a 12% chance of experiencing an adverse event. Tess and Lex are both aware of their risk of an adverse event. Refer to Scenario 2 Suppose that insurance companies do not know specific probabilities of adverse events for Tess or Lex, but do know the average probability of an adverse event. If they assumed that both Tess and Lex purchase full insurance, what is the actuarially fair premium charged? Round to two decimal placesSuppose in a given state's new insurance marketplace, with community rating and no restrictions on who can buy at the community rate, the risk pool (distribution of expected health costs) is as follows: 30% of eligible enrollees' expected health costs = $1,000 (per year)65% of eligible enrollees' expected health costs = $2,0005% of eligible enrollees' expected health costs = $10,000 Now suppose one insurer, and one insurer only, were allowed to offer any premium it wanted to any potential buyer and to exclude those it did not want to cover? What premium would they likely charge and who would they sell to and who would they exclude? What would happen to the other insurers? Does this help you see why the ACA was written to apply to all insurers?Which one is an option for health insurance market Universal public insurance Compulsory insurance Employer-sponsored insurance All of the above
- QUESTION 13 The size of the uninsured and underinsured population in the United States has become an indication of the access problems in the US healthcare system.TrueFalse QUESTION 14 If the expected age of death for a male aged 20 is 75, then a 20-year-old man who dies is considered to have lost how many years of life? A. 20 years of life B. 75 years of life C. 55 years of life D. None of these QUESTION 15 Why is survival time considered to be a good indicator of health status? A. It measures health outcomes as compared to costs B. It places an emphasis on the time spent(duration) in a specific health state C. The measure accounts for mortality rates D. It measures outcomes or health state at a given point in timeIn the ____ system, risk selection may arise. This is when _____. A. Bismarck; insurers seek out healthy customers. B. Beveridge; insurers seek out health customers C. Beveridge; high-risk customers seek out health insurance D. Bismarck; high-risk customers seek out health insuranceWhat is the true cost of going to the doctor? Question 7 options: The amount you pay minus the amount your insurance covers (i.e. the amount you pay out of pocket) The amount you pay There is no cost if your insurance is good enough. The amount you pay out of pocket, plus the worth of the time you lose while waiting, plus the travel cost, plus the increased risk of being infected with Covid-19 while at the doctor's office
- Government provided social insurance is most beneficial in the cases where the probability of adverse events is _____ to calculate and the costs of the adverse events are _____. a.hard/low b.easy/high c.easy/low d.hard/highSuppose a municipality were considering a ban on sugary soft drinks. They estimate that 20% of the obesity in the city can be attributed to sugary soft drinks, and thus the ban would be expected to reduce obesity by 20%, citywide. Which measure corresponds to '20%? a. Odds ratio b. Population attributable proportion c. Cumulative incidence d. Relative risk e. Risk difference f. Attributable risk among the exposedWould this be d? Dan, age 19, may have trouble buying auto insurance at a low price because insurance companies a)operate in markets in which screening is inefficient. b)fear that he has private information that his deductible is too high. c)have private information that his signals are valid. d)have private information that he is a risky driver. e)fear that he has private information that he is a risky driver.
- An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he does get sick, the medical bills will total 30,000. The following tables shows the utility derived from certain amounts of income: Income Utility40,000 20037,000 19535,000 19030,000 17020,000 14010,000 100Considering the probability of illness, what is the expected utility of income without insurance? Show your work.Which of the following reports has the primary purpose lo inform an insurance company about a prospect's previous medical insurance history? A.Medical Information Bureau (MIB) B,Attending physician's stalement C.Inspection report D.Producer's reportMultiple Choice Adverse selection describes a situation where an individual's demand for insurance is positively correlated with the individual's risk of loss. Adverse selection occurs when someone increases their exposure to risk when insured. This can happen, for example, when a person takes more risks because someone else bears the cost of those risks. The relationship between smoking status and mortality provides a good illustration for adverse selection, especially in the case in which a life insurance company did not vary its premiums according to smoking status of its customers. To counter the effects of adverse selection, insurers may offer premiums that are proportional to a customer's risk.
