1/ For a consumer with insurance, the incentive to obtain more medical care is _
ID: 1218069 • Letter: 1
Question
1/ For a consumer with insurance, the incentive to obtain more medical care is _____ as the marginal cost of additional care is _____.
a/ high; high
b/high; low
c/ low; high
d/ low; low
2/
The United States is likely to get increasingly ________ marginal health benefits as it increases its quantity and spending of health care because of ______________.
3/ Asymmetric information can arise in which way? ( im confused btw answers A and D )
4/
Tim Taylor is very reckless, but he neglected to tell his insurance provider when buying his policy. Over the last year, he used his insurance to pay for two broken arms, stitches several times, and a broken leg. When renewing Tim’s policy, his insurance provider should require ____________ due to the _______________.
5/
Because of barriers to entry, the wages of physicians and nurses are ______ and quantity demanded is ______, causing a ______ from the previous market equilibrium.
d/
a/less; diminishing returnsExplanation / Answer
Answer 1:
Option B. In the case of medical insurance, the incentive to obtain medical care is high as marginal cost of additional care is low. because insureres bear a part of the cost of medical care.
Answer 2:
Option A.
Diminishing marginal returns will lower the marginal benefits form additional expenditure on health care.
Answer 3:
Option D. Adverse selection, principal agent problem are all due to asymmetric information.
Answer 4:
Option A. Due to his reckless behavior, higher co payments are needed. RTHis also depict moral hazard problem.
Answer 5:
Option D.
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