ECNS 202 PRINTOUT
8th Edition
ISBN: 9781337096584
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 7, Problem 7PA
Subpart (a):
To determine
To draw:The
Subpart (b):
To determine
The impact of
Subpart (c):
To determine
Whether producer or consumers of TVs benefits most when the production costs decreases.
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Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics &
criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health
and criminology professors all have the same level of health.
There is evidence of
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Economics Professors
Criminology Professors Yes.
Yes
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$15,000
0000
???
???
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$10,000
I. moral hazard because in 2021 criminology professors dropped their coverage and health expenditures went down.
II. adverse selection because in response to rising premiums after 2020, the professors with lower health expenditure dropped coverage
Both I and II
neither I nor II
Knowledge Booster
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