Which of the following is not related to adverse selection in insurance markets?
a. An insurance company has no way of distinguishing among applicants
b. An insurance company must charge a higher price to applicants who are good health risks
c. The price of insurance is attractive to poor health risks, but not to good ones
d. The insured group becomes less healthy on average
e. Because of the relative unhealthiness of the insured group, rates must rise
B
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Which of the following statements is true regarding expansionary fiscal policy?
A) It leads to an increase in the supply of bonds by the Treasury. B) It leads to a fall in interest rates. C) It leads to an increase in net exports. D) It tends to reduce to size of government.
The optimum tariff is
A) the best tariff a country can obtain via a WTO negotiated round of compromises. B) the tariff, which maximizes the terms of trade gains. C) the tariff, which maximizes the difference between terms of trade gains and terms of trade loses. D) not practical for a small country due to the likelihood of retaliation. E) not practical for a large country due to the likelihood of retaliation.