Figure 10.5 Does public insurance crowd out private insurance? In Panel A, the introduction of public insurance has no impact on private insurance coverage. In Panel B, the introduction of public insurance crowds out private insurance. Panel C shows the preferences of someone who carried no private insurance, but obtains public insurance after it is introduced. ********** A. Person who places relatively high C. Person who is uninsured before public insurance value on private insurance 0 Amount of publicly provided insurance Health insurance O B. Person who places relatively low value on private insurance Amount of publicly provided insurance Health insurance 0 Amount of publicly provided insurance ************ Health insurance

Figure 10.5 Does public insurance crowd out private insurance? In Panel A, the introduction of public insurance has no impact on private insurance coverage. In Panel B, the introduction of public insurance crowds out private insurance. Panel C shows the preferences of someone who carried no private insurance, but obtains public insurance after it is introduced. A. Person who places relatively high C. Person who is uninsured before public insurance value on private insurance 0 Amount of publicly provided insurance Health insurance O B. Person who places relatively low value on private insurance Amount of publicly provided insurance Health insurance 0 Amount of publicly provided insurance ** Health insurance

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Which of the following is not a methodology used to determine the amount of necessary life insurance?a. The Human Life Value Method.b. The Financial Needs Method.c. The Ways and Means Method.d. The Capitalization of Earnings Method.
5
1. Indicate which of the following describes a moral hazard problem and which describes adverse selection: a. A person with a terminal illness buys several life insurance policies via the internet. b. A person rides carelessly because he has motorcycle insurance. c. A person who intends to burn down his house takes out a large fire insurance policy. d. A woman who anticipates having a large family takes a job with a firm that offers exceptional childcare benefits.
25. Which of the following is the best example of a moral hazard problem? Question 25 options: a) A borrower uses the proceeds of a business loan to gamble at a Las Vegas casino. b) A borrower decides to borrow at a fixed rather than a variable interest rate. c) A bank has difficulty in distinguishing between good and bad credit risks. d) A borrower makes all of her payments despite a downturn in her business.
5
1. Which of the following statements is consistent with markets where it is difficult for buyers to assess the quality before purchase? Sellers have incentives to sell high-quality goods at high prices. Pri is not a reliable indicator of quality. Sellers need to be skeptical of buyer intent. In spite of the difficulty, the market result will be efficient.
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
This question is broken into 4 parts. Please answer all parts. A. Explain the relation between moral hazard and insurance premiums. B. Now think about how people with different health risks assess insurance products with a given deductible, and explain how supporters of minimizing adverse selection should think about a proposal (say from Bernie Sanders) that all insurance policies should have zero deductibles and coinsurance. C. Does community rating make the policy tradeoffs inherent in b harder or easier to manage? D. Would a purchase mandate make the policy tradeoffs inherent in b + c harder or easier to manage?
Suppose a demand curve has the form x = 100 - 10p. If the market price is $5, how would a $200 deductible impact quantity demanded? A. The consumer will behave in the same manner as he would with no insurance and consume 50 services. B.The consumer will behave in the same manner as he would with no insurance and consume 0 services. C.The consumer will behave as if the market price is $0 and consume 50 services. D.The consumer will behave as if the market price is $0 and consume 100 services.
6. Answer which happens, moral hazard or adverse selection, or nothing happens under each of the following situations. [M20]: A driver drives a car rough because s/he has a property insurance of a car. b. Adverse selection [M21]: Since a driver cannot distinguish among qualities of cars, s/he may buy a bad one. a. Moral hazard c. nothing a. Moral hazard b. Adverse selection c. nothing [M22]: Banks look for lenders, but most customers who apply for loans seem to have difficulty repaying them even in assuming they make an identical effort. a. Moral hazard b. Adverse selection c. nothing