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/high

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/high

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 8P

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Concept explainers

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.

Question

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/high

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Which is the best example of health care insurance in the sense of socializing risk? a. A dental insurance policy that pays for two check-ups a year but nothing else.b. A comprehensive health care policy that essentially pays for everything including check ups but is very expensivec. A health care policy that is relatively inexpensive but only pays for medical expenses after a $2,000 annual deductible is met. After $2,000 the policy pays 100 percent for everything.
Suppose an individual saves as precaution against adverse events, like unemployment. This is an example of a-adverse selection b-self-insurance c-adverse saving d-moral hazard
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1. We should expect to see more people in a group to purchase insurance as the probability of illness ___________ and the costs of an illness ____________.
Suppose instead the man’s neighbor, who is not a public servant, sees the man dangling from his 4th floor patio. The neighbor springs into action, busting down the man’s door and pulling him to safety from the patio. In gratitude, the man promises to Venmo his neighbor $50,000 for saving him. Is that promise enforceable? a) No, because a promise made on account of something that the promisee has already done is not enforceable b) Yes, because legal sufficiency has nothing to do with adequacy of consideration c) Yes, because there was an offer that was accepted d) No, because the man was obviously incompetent, because only a mindless idiot would have gotten stuck like that
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The principal of a school hires Daniel to teach eighth grade students. One goal the principal has is to prepare the students to do well on standardized tests, as he will be judged based on the results of those tests. Daniel prefers to teach in a more creative way, so the students learn a lot, but perform poorly on their standardized tests. This is an example of what problem? a. Adverse hazard b. Moral hazard c. Adverse selection d. Free-riding
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