2 Which of the following represents an effort to correct for an adverse selectionproblem?a. The government subsidises the consumption of fitness activities.b. An employer requires all employees to submit to drug testing.C.An employer requires all employees to purchase employer-sponsored dentalinsurance.d. The government subsidises the development of eco-friendly productionmethods.e. The government imposes a tax on a factory emitting a toxic substance.

When talking about adverse selection, it is one of the form of asymmetric information, which causes…

Which of the following represents an effort to correct for an adverse selection problem? a. The government subsidises the consumption of fitness activities. b. An employer requires all employees to submit to drug testing. O c. An employer requires all employees to purchase employer-sponsored dental insurance. d. The government subsidises the development of eco-friendly production methods. e. The government imposes a tax on a factory emitting a toxic substance.

Which of the following represents an effort to correct for an adverse selection problem? a. The government subsidises the consumption of fitness activities. b. An employer requires all employees to submit to drug testing. O c. An employer requires all employees to purchase employer-sponsored dental insurance. d. The government subsidises the development of eco-friendly production methods. e. The government imposes a tax on a factory emitting a toxic substance.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter19: The Problem Of Adverse Selection

Section: Chapter Questions

Problem 6MC

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Similar questions

The government can help solve the problem of adverse selection in each of these ways EXCEPT: a. reducing the need for insurance. b. requiring that everyone buy insurance. c. providing incentives for buyers to reveal private information. d. providing insurance.
Identify each of the following as an adverse selection or a moral hazard problema. A person with car insurance fails to lock his car doors when he shops at a mall.b. A person with a family history of cancer purchases the most complete health coverage available.c. A person with health insurance takes more risks on the ski slopes of Aspen than he would without health insurance.d. A college professor receives tenure (assurance of permanent employment) from her employer.e. A patient pays his surgeon before she performs the surgery.
_____ is when everyone in a country is covered by insurance that is run and administered by the government. This strategy is effective at combatting _____. a. Means tested health insurance; adverse selection b. Universal public health insurance; adverse selection c. Universal public health insurance; moral hazard d. Compulsory insurance; moral hazard e. Compulsory insurance; monopoly pricing f. Means tested health insurance; moral hazard
Q73 Adverse selection is... a. Asking a private pilot about the safety of his plane. b. Purchasing more dental insurance when you know your teeth are especially bad. c. Purchasing the required homeowner's insurance when you buy a condo. d. Asking a doctor if you are sick. e. Asking your lawyer if you should sue your doctor for malpractice.
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.
The difference between moral hazard and adverse selection is a. moral hazard has to do with unobservable characteristics of individuals b. moral hazard has to do with unobservable actions of individuals c. adverse selection is when individuals change their behaviors because of a contract d. adverse selection is when you choose the wrong answer on a test
Suppose that country has adopted a risk-adjustment scheme to help combat risk selection. Suppose further that a sickness fund has become particularly adept at controlling costs associated with a certain illness/disease. In fact, the fund routinely treats customers with that particular illness for less than the national average cost of treating that illness. In this case, _____. A. the fund may actually make money by enrolling individuals with that illness. B. the fund would loose money enrolling individuals with that illness. C. the fund would be indifferent to enrolling people with that illness.
People drive faster when they have auto insurance. This is an example of: a. Adverse selection. b. Asymmetric information. c. Moral hazard.
Let W represents an individual’s annual earned income and U(W) = (W/10)0.5 is this individual’s von Neumann-Morgenstern utility index (or utility function) . This individual earned income is $49,000. This individual faces the prospect of a 20% chance of needing health care, with a price tag of $13,000. Assume this person is risk averse. Also assume that the insurance company has only claim costs and that administrative costs are $0. The maximum health insurance premium this individual is willing to pay is??
if a patient pays his surgeon before she performs the surgery, is this adverse selection or moral hazzard
TRUE or FLASE? A. The Beveridge model in the United Kingdom reduces moral hazard by having public providers compete to provide high quality care. B. The Bismarck Model in Germany reduces adverse selection primarily by having a universal, compulsory health insurance system. C. The Bismarck Model in Germany emphasizes equity over choice whereas the Beveridge Model in the United Kingdom emphasize choice over equity. D. The Bismarck Model in Germany reduces moral hazard by requiring cost sharing. E. The Bismarck Model in Germany controls costs by allowing private insurers to negotiate competitive rates with private physicians.
How is the moral hazard problem relevant to the health care market?