Which practice helps health insurance companies overcome the problem of adverse selection?
A. They sell insurance only to unhealthy people.
B. They sell insurance only to healthy people.
C. They have switched to the experience rating system.
D. All of these.
Answer: C
You might also like to view...
Jay set up his hot dog stand near the business district. His total variable cost includes the
A) annual insurance for the hot dog stand. B) cost of buying the hot dog stand. C) cost of the hot dogs and condiments. D) interest he pays on the funds he borrowed to pay for advertising. E) revenue he gets when he sells his first hot dog each day.
The prisoners' dilemma is a game in which
A) the dominant strategy for all participants is to choose a strategy that makes them all worse off. B) the dominant strategy is to cooperate. C) only one of the firms is able to make above-normal profits. D) each firm, in making decisions on the basis of its own self-interest, also makes decisions that benefit the group as a whole.