How is moral hazard related to health care?
What will be an ideal response?
Moral hazard is affiliated with many insurance systems. A person who is insured will use health care services more than one who is not insured and may engage in a lifestyle that is less healthful than one with less insurance. These create greater costs to the insurance companies and the health care system. Physicians also are more likely to require tests when insurance companies pick up the costs.
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Business cycles in the United States
A) tend to occur at regular intervals and are periodic. B) tend to recur at irregular intervals, but are usually of the same length. C) were quite common before World War II but have not occurred in the postwar period. D) tend to have expansions that last longer than the recessions.
Consider a wine maker who has put her wine in bottles. The question is whether to store the wine for a marginal cost of $1 per year or to sell the wine today at a price of $10. If the interest rate is 6%, how much must the price of the wine increase in the next year to justify storing it?
A) $1.66 B) $1.27 C) $0.72 D) $0.45