.Choose the correct statement. A.Adverse selection arises in health insurance because some of the healthiest people choose to be​ uninsured, at least during their younger years.

1.Choose the correct statement.

A.Adverse selection arises in health insurance because some of the healthiest people choose to be​ uninsured, at least during their younger years.

B.Moral hazard arises in health insurance because once​ insured, a person has less incentive to adopt a healthy lifestyle.

C.In the market for health​ insurance, the buyers have private information and in the market for health​ care, the sellers have private information.

D.All of the above are correct.

2.Choose the statement that is incorrect.

A.93 million people are covered by Medicare and Medicaid.

B.The government spends​ $10,387 per person per year on Medicare and Medicaid.

C.About 48 million people limit their​ health-care costs by using an HMO.

D.The cost of private insurance per person covered is 46 percent of the cost of the government programs.

3.Without knowledge about driver​ types, there is​ _______ equilibrium in the market for car insurance.

A.a pooling

B.an unfair

C.an asymmetric

D.a separating

 

 

answer:

1.

Correct Answer:

D.

Explanation:

All the statements are correct

Adverse selection happens when healthy people opt not to go for health insurance and people in risk profile opt to go for health insurance. Buying a health insurance also creates a moral hazard as people think that they are already insured and any damage due to their adventures will be paid by the insurance providers.

Also, buyer of the insurance has private information related to his or her health, any medical history or related issues. But, a health care provider has the private information related to the quality of services, availability of the services and other related details.

Pl. repost other unanswered questions for their proper answers!

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