Q1(a) When a company buys medical insurance for all its workers, the insurance premium per workers is generally much cheaper on the average for comparable coverage, compared to insurance purchased by individuals. The difference in cost may not be just due to differences in the administration costs in handling bulk insurance policies in a company’s transaction. Explain, in the context of information, for this cost differential.
Q1(a) When a company buys medical insurance for all its workers, the insurance premium per workers is generally much cheaper on the average for comparable coverage, compared to insurance purchased by individuals. The difference in cost may not be just due to differences in the administration costs in handling bulk insurance policies in a company’s transaction. Explain, in the context of information, for this cost differential.
(b)
It is discovered that children who attended pre-schools are helpful and considerate in the society. However, preschool is optional and very costly. Not all parents send their children to pre-school.
(i) Use an appropriate diagram, depict the market for pre- school and explain the type of externality described. Is the
(ii) From social efficiency point of view, should the government make it compulsory for all parents to send their children to pre-school? Explain.
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