Homework Answers
In economics, moral hazard occurs when someone increases their exposure to risk when insured, especially when a person takes more risks because someone else bears the cost of those risks.
Therefore it is a problem of moral hazard
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If an individual is less careful about avoiding accidents or illness because she has health insurance,...
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse...
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider mo D) moral hazard; free-rider 9ms nie and soon.3DIOHD H IITIUM o d bratobru ovllnoiloup or Wents on linolars of bobol i tad voor 1. L: L
1. What would be the consequence for insurance companies allowing patients as many treatments as they...
1. What would be the consequence for insurance companies allowing patients as many treatments as they want? Group of answer choices The moral hazard problem would become more severe. The principal-agent problem would become less severe. The adverse selection problem would become more severe. The moral hazard problem would become less severe. The adverse selection problem would become less severe. 2. What would be the consequence for patients of a law that limited the amount of annual profit a health...
A health insurance company knows that there are two types of customers (smokers and non-smokers), each...
A health insurance company knows that there are two types of customers (smokers and non-smokers), each facing different health risks. The probabilities of getting sick and the healthcare costs in the case of illness for the two customer types is given in the table below. Group Healthcare costs Probability of getting sick Smokers $1200 50% Non-smokers $1200 20% Assume that each customer has a monthly income of $1600 and has a utility function given by U(x)=sqrt(x), where x is the...
1. Because of ______, the market will provide ______ the socially optimal level of information. A....
1. Because of ______, the market will provide ______ the socially optimal level of information. A. The credibility problem; more B. The problem of adverse selection; less C. moral hazard; more D. The free-rider problem; less 2. If technological developments increase the marginal product of labor, then the: A. Supply of labor will increase. B. Demand for labor will decrease. C. The equilibrium wage rate will decrease. D. Demand for labor will increase.
1. A life insurance company must be concerned about the possibility that the people who buy...
1. A life insurance company must be concerned about the possibility that the people who buy life insurance may tend to be less healthy than those who do not. This is an example of adverse selection. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. [2 marks] 2. An insurance company must be concerned about the possibility that someone will buy fire insurance on a building and then set fire to it....
LUP UC ar uperUUUn tutu u TCU w cusure till you are loureying on the text...
LUP UC ar uperUUUn tutu u TCU w cusure till you are loureying on the text or you motes. If you encounter any technical problems while taking the test, please contact the help desk immediately. Question 1 2 pts A firm lets its workers choose a specific amount of benefit money toward certain insurance. Michael has six kids who need glasses, so he selects the family vision coverage. This is an example of the O moral hazard problem. Ofree-rider problem....
The purchase of insurance is considered rational when it is used to _ O A. solve...
The purchase of insurance is considered rational when it is used to _ O A. solve a principle-agent problem O B. overcome propitious selection O C. create moral hazard O D. overcome asymmetric information QUESTION 4 Which of the following is an example of moral hazard? O A. The passage of laws to enforce a specific view of morality. OB. The overuse of antibiotic durgs. O C. A healthy person refusing to purchase health insurance. O D. A sports team...
The principal-agent problem: O A. eliminates costly state verification. B. occurs because owners have incomplete information...
The principal-agent problem: O A. eliminates costly state verification. B. occurs because owners have incomplete information about the motives and behavior of managers. O C. is not related to asymmetric information. OD. is a type of adverse selection. The free rider problem: O A. results from the production of information being much like a public good where exclusion is not possible OB. makes it easier for an investor to continue to buy securities at less than the true value O...
Vienna is interested in purchasing a critical illness insurance policy, but is unsure about the amount...
Vienna is interested in purchasing a critical illness insurance policy, but is unsure about the amount of coverage she should purchase. Vienna has a family history of cancer and is most concerned with the costs she may incur if she is diagnosed. She meets with Mitchell, an insurance agent, and he shows her several different CI policies, each with some variation on the covered conditions. Which of the following is a factor that should be considered in determining the amount...
Moral Hazard Before we leave the subject of the impact of insurance on the demand for...
Moral Hazard Before we leave the subject of the impact of insurance on the demand for medical care, we need to introduce the concept of moral hazard. Moral hazard refers to the situation in which consumers alter their behavior when provided with health insurance. For example, health insurance may induce consumers to take fewer precautions to prevent illnesses or to shop very little for the best medical prices. In addition, insured consumers may purchase more medical care than they otherwise...
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider mo D) moral hazard; free-rider 9ms nie and soon.3DIOHD H IITIUM o d bratobru ovllnoiloup or Wents on linolars of bobol i tad voor 1. L: L
1. A life insurance company must be concerned about the possibility that the people who buy life insurance may tend to be less healthy than those who do not. This is an example of adverse selection. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. [2 marks] 2. An insurance company must be concerned about the possibility that someone will buy fire insurance on a building and then set fire to it....
LUP UC ar uperUUUn tutu u TCU w cusure till you are loureying on the text or you motes. If you encounter any technical problems while taking the test, please contact the help desk immediately. Question 1 2 pts A firm lets its workers choose a specific amount of benefit money toward certain insurance. Michael has six kids who need glasses, so he selects the family vision coverage. This is an example of the O moral hazard problem. Ofree-rider problem....
The purchase of insurance is considered rational when it is used to _ O A. solve a principle-agent problem O B. overcome propitious selection O C. create moral hazard O D. overcome asymmetric information QUESTION 4 Which of the following is an example of moral hazard? O A. The passage of laws to enforce a specific view of morality. OB. The overuse of antibiotic durgs. O C. A healthy person refusing to purchase health insurance. O D. A sports team...
The principal-agent problem: O A. eliminates costly state verification. B. occurs because owners have incomplete information about the motives and behavior of managers. O C. is not related to asymmetric information. OD. is a type of adverse selection. The free rider problem: O A. results from the production of information being much like a public good where exclusion is not possible OB. makes it easier for an investor to continue to buy securities at less than the true value O...
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