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An increase in insurance coverage would result in higher sales and higher prices. True or False....

An increase in insurance coverage would result in higher sales and higher prices. True or False.

A subsidy for insurance coverage provided by an employer will

have no effect on equilibrium price and quantity for those who get the subsidy.

increase equilibrium price and quantity for those who do not get the subsidy.

drive up prices for consumers who are not eligible for the subsidy.

none of the above.
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Answer #1

Insurance coverage is one of the factors that affects the sales and prices of a policy. Increase in insurance coverage results in a higher price and higher sales, as the sales and prices are positively affected by the increase in insurance coverage. Therefore, the statement is True. A subsidy for an insurance coverage will benefit those who get the subsidy and harm those who are not able to get the subsidy. It will increase the prices and decrease the quantity for the consumers who are not able to get the subsidy Therefore, third option is the correct answer. That means, the subsidy will drive up the prices for those who are not eligible for the subsidy.

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