Which of the following statements is true? Select one: a. As the expected loss i

Question

Which of the following statements is true?

Select one:

a. As the expected loss increases, the gain from insurance decreases.

b. Low loading costs partly explain why it is difficult for the self-employed to get health insurance.

c. Increased loading costs may increase insurance coverage for certain groups.

d. Consumers are willing to pay less to avoid risk in cases where an adverse event is almost certain to occur.

Consider a normal upward sloping supply function and a downward sloping demand function that depict the outpatient market for physical therapy (PT) services (intersecting with an equilibrium price and quantity). If rapid entry of new PT graduates pushed down wages of therapists, how would the equilibrium price and quantity change (P* and Q*)?

Select one:

a. P* and Q* would both rise.

b. P* would rise and Q* would fall.

c. P* would fall and Q* would rise.

d. P* and Q* would both fall.

Health care resources are distributed in the U.S. based on need.

Select one:

True

False

Imperfect regulations are guaranteed to give better outcomes for consumers than imperfect markets will.

Select one:

True

False

Fee-for-service and salary compensation create similar incentives.

Select one:

True

False

The public interest model of regulation argues that individuals and groups seek regulations that further their interests.

Select one:

True

False

Greater risk aversion increases the demand for insurance.

Select one:

True

False

Explanation / Answer

Greater risk aversion increases the demand for insurance. This statement is true.

Consider a normal upward sloping supply function and a downward sloping demand function that depict the outpatient market for physical therapy (PT) services (intersecting with an equilibrium price and quantity). If rapid entry of new PT graduates pushed down wages of therapists, then the supply curve would shift to the right. RIghtward shift in the supply curve means that the equilibrium price and quantity both will fall. So (d) P* and Q* will fall, is correct.

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