An indication that Insurance companies anticipate adverse selection is
a. they require a deductible
b. they do not classify clients into different risk types according to their claim history
c. they do not classify clients into different risk types according to pre-existing conditions
d. they do not require a co-payment
a
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If the marginal private cost of running a car is $0.30 a mile and the marginal external cost is $0.10, what is the marginal social cost?
A) $0.20 B) $3.00 C) $0.03 D) $0.40 E) None of the above answers is correct.
Suppose a 25-year-old worker purchases a $5,000 bond that pays 6% interest per year which she plans to withdraw when she retires in 40 years. How much will the $5,000 accumulate to in 40 years? If the worker faces a marginal tax rate of 30% on interest income, how much will the $5,000 accumulate to in 40 years?