b) Explain how requirement that borrowers put up collateral before accessing a loan heln reduce adverse selection in the market for credit c) Explain how requirement that individuals take a full body checkup when taking up health insurance reduces adverse selection in the market for health insurance

b) Explain how requirement that borrowers put up collateral before accessing a loan heln reduce adverse selection in the market for credit c) Explain how requirement that individuals take a full body checkup when taking up health insurance reduces adverse selection in the market for health insurance

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 4CQQ

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5. Explain how imperfect information problems such as adverse selection and moral hazard might affect the following markets or situations (also identify the problem whether adverse selection or moral hazard or both of them) a. Workers report medical history for health insurance. b. The market for used car. c. The market for automobile collision insurance
Julia is a 28- year-old nonsmoking , non-drinking female of normal weight Because of adverse selection in health insurance , (A) She will be charged less for her premiums than people who are higher risks ) B)She is less likely to buy health insurance than the average person, because policy premiums are based on expected medical expenditures of people who are less healthy than she is ( C) When she get health insurance , she will be less likely to take care of herself. ) D)She must get health insurance early in life, and is likely to lose health insurance if she smokes , drinks to excess, or gains weight. E) She is more likely than the average person to buy health insurance , because she is more likely to be offered it.
Breifly discuss the factors that determine demand for an insurance policy and how they different then normal determinant demand of a commodity?
Which of he following stalements about policy delivery is CORRECT? A.The producer should deliver lhe policy before lhe Free Look period expires B.The producer should deliver he policy in person and advise the insured to call the insurance company's home office if here are any questions. C.The producer should mail the policy to the insured to reduce the chance that the insured will reconsider and return the policy. D.The producer should explain the alicy to the insured to increase lhe chance that the insured will understand the policy's benefits and keep it.
5 2.Asymmetric Information. Now let’s examine the impact of asymmetric information on thecreditmarket equilibrium. Specifically, in this question we assume that Anderson is not able toobserveor enforce the project that the borrower chooses. As a result, the loan contract can onlyspecifythe interest rate (not the project). Everything else remains as in problem 1.a.What type of asymmetric information problem does Anderson face? Write a shortexplanation justifying your answer.
Different reimbursement approaches/strategies involve more or less risk for health care providers and for health insurance companies. Which approaches/strategies involve the most risk for health are providers? Which approaches/strategies involve the most risk for health insurance companies? Explain “why” in each of your answers, and make sure you define all relevant terms and concepts
explain the difference between moral hazard and adverse selection using the example of health insurance. what are the consequences of each of them for the functioning of private insurance markets?
Please answer the below questions all answers must be original No Plagiarism cannot use internet answers You must provide a plagiarism report DUE TODAY 5/29/2016 6:00 P.M. PACIFIC TIME ZONE 18:00 EASTERN TIME ZONEMUST DELIVER ONTIME NO ROOM FOR LATE DELIVERY1. (Asymmetric Information) Define asymmetric information. Distinguish between hidden characteristics and hidden actions. Which type of asymmetric information contributes to the principal-agent problem?2. (The Principal-Agent Problem) Discuss the nature of the principal-agent problem. Determine which is the principal and which is the agent in each of the following relationships:a) A- A firm that produces export goods and the export management company that helps market its goods overseasb) B.-The management of a firm and its stockholders3. (Securities Exchanges) What role do securities exchanges play in financing corporations?4. Although the article is dated, please read Jane Katz, â€œWho Should Be in…
question 9 Consider the credit contract with collateral in the adverse selection problem from our class. The incentive compatibility constraint for the low risk type borrower states that obesvarad options a. The low risk type borrower is indifferent between applying for the low risk type credit contract and the high risk type credit contract. b. The low risk type borrower prefers applying for the low risk type credit contract over the non-participation c. The low risk type borrower only applies for the low risk type credit contract. d. The low risk type borrower derives higher utility than the risk type borrower. question 10 According to Diamond and Dybvig (1983), why does a bank run happen? options a. Because banks can have a liquidity problem without being insolvent. b. Because agents do not know their types at the beginning. c. (economic) interest. d. Because banks always need to borrow money to pay for the liquidity needs in period 1.