Q&A Hero

Q: Low insurance copayments ________ consumer demand for health care, while fear of malpractice suits can ________ the medical treatment prescribed by doctors.a. increase; decrease b. decrease; increase c. increase; increased. decrease; increasee. steady; offset

Q: Due to the structure of insurance copayment systems, the marginal cost of seeking medicaltreatment isa. high. b. low. c. increasing.d. decreasing.e. at equilibrium.

Q: The cost level of providing health care is due to the ________ of incentives that exist for consumers, producers, and intermediaries.a. harmony b. symbiosis c. asymmetryd. conflicte. division

Q: Before a drug can be sold in the United States, it must be reviewed and receive approval from which government agency?a. SEC b. FEC c. FDAd. FHAe. FDIC

Q: The U.S. market accounts for approximately ________ percent of global pharmaceutical sales.a. 60 b. 55 c. 5d. 30e. 50

Q: ________ is a specialized type of insurance that protects doctors from liability in cases of negligent treatment.a. Malpractice b. Malfeasance c. Intermedienced. Distributive liabilitye. Regressive liability

Q: What is the main difference between HMOs and PPOs? a. HMOs require substantially more out-of-pocket contributions. b. PPOs require patients to provide significant collateral before scheduling a surgical procedure. c. PPOs give patients relative freedom to choose doctors and hospitals, while HMOs assign a primary care physician. d. Only HMOs place a lifetime cap on the amount of payments made on behalf of a patient. e. They are identical in practice. Like other monopolistic competitors, insurance companies seek differentiation through product naming.

Q: Which of the following statements is true about coinsurance, deductibles, and co-payments? a. These work as a ration on health care consumption by forcing the insured to pay out-of-pocket for a portion of his or her expenditures. b. Since insurance companies already completely pay for an insureds medical treatment, these payments only add to the cost of health care without providing additional benefits. c. Industry regulators consider these practices largely fraudulent, and numerous states are attempting to ban their use in insurance policies. d. Over a lifetime, they result in consumers paying more for their insurance than they would for medical care. e. They trivialize the need for healthcare intermediaries.

Q: Even after reaching an insurance policys deductible, some plans require the insured to pay a percentage of costs up to the policys contribution limit. These are known asa. coinsurance payments. b. copayments. c. pay-in costs.d. supradeductibles.e. insurance traps.

Q: ________ are fixed amounts that the insured must pay before most of the policys benefits can be applied.a. Deductibles b. Premiums c. Pay-in costsd. Copaymentse. Compensatory limits

Q: What are fixed amounts that the insured must pay when receiving a medical service or filling a prescription?a. copayments b. deductibles c. negotiated feesd. coinsurancee. premiums

Q: Medicare and Medicaid account for approximately ________ of all government spending.a. one-half b. one-third c. three-quartersd. one-fifthe. two-thirds

Q: ________ is the federal program that provides medical assistance to the poor.a. Obamacare b. Medicaid c. Welfared. Medicaree. Affordable Care Act

Q: ________ is the federal program that provides medical assistance to the elderly.a. Medicaid b. Medicall c. Obamacared. Affordable Care Acte. Medicare

Q: The two biggest consumers of medical care are ________ and ________.a. veterans; the elderly b. the elderly; children c. the poor; childrend. veterans; the poore. patients; government

Q: The ________ structure within the healthcare industry contributes to escalating costs.a. diminishing b. inefficient c. efficientd. incentivee. expenditure

Q: Diminishing returns to healthcare spending indicates that greater efficiency can be achieved by a. decreasing overall spending. b. decreasing spending in top categories such as hospital care. c. increasing spending in areas that now only account for a small fraction of overall spending. d. reallocating funds in areas with declining returns to areas with substantial production potential. e. exhausting all possibilities to extend human life, which will lead to greater output per person.

Q: Which of the following statements is true? a. Factors other than healthcare expenditures contribute significantly to diminishing returns. b. As a result of efficiency and technology, healthcare spending is subject to permanent increasing returns. c. According to the production function, high initial healthcare spending is required to produce any measurable returns. d. End-of-life treatments are often the most cost-effective because hospitals have a fixed time frame for which to administer care. e. As a result of efficiency and technology, healthcare costs are wholly on the decline, despite large increases in many aspects.

Q: Computerized medical records have promoted ________ in recent years, while industry costs are ________.a. greater efficiency; declining b. greater efficiency; rising c. increased privacy; decliningd. decreased privacy; declininge. technology; rising

Q: Treatments with a high cost-to-benefit ratio, like heroic efforts to extend life, would ________ if consumers had greater out-of-pocket expenses.a. remain unchanged b. disappear completely c. increase dramaticallyd. increase marginallye. decrease

Q: Since many medical procedures involve lifesaving treatment, demand can best be described asa. sticky. b. perfectly elastic. c. unit elastic.d. perfectly inelastic.e. very inelastic.

Q: More important than total expenditure is the ________ delivery of health care.a. unregulated b. unrationed c. efficientd. diminishinge. asymmetric

Q: How does health insurance distort what is otherwise a normal consumer transaction? a. Health insurance turns human lives into what is little more than risk assessment. b. Individuals purchase insurance in case they get sick, not because they seek a healthy lifestyle. c. It doesnt create distortions. In fact, health insurance produces better market fundamentals than direct transactions. d. The individual consuming the service is not primarily responsible for payment. e. Insurance companies magnify the problem of adverse selection.

Q: The societal trade-off in health care usually means that a. the more you pay for health care, the less your insurer pays. b. being unhealthy is more fun, but you pay the price in more healthcare cost. c. a longer life, especially as a senior citizen, costs more for everyone. d. stronger cancer treatments hurt you in the short run, but enable you to live longer. e. guarding against as many infections as possible will be rewarded with longer life.

Q: Major advances in technology and medicine since 1950 have created a trade-off between ________ and ________.a. cost; life expectancy b. innovation; malpractice c. ethics; efficacyd. treatment; caree. health; well-being

Q: At the start of the twentieth century, life expectancy in the United States wasa. slightly less than 50 years. b. slightly less than 60 years. c. slightly greater than 60 years.d. similar to what it is today.e. slightly greater than 70 years.

Q: The U.S. healthcare debate is a polarized one, often limited to the merits of a privatized versus a universal system. In reality, however, solutions involve many complexa. trade-offs. b. markets. c. demands.d. agents.e. expenditures.

Q: In terms of the supply curve, the consequence of allowing people to sell their body organs is that the supply a. of organs becomes more inelastic. b. of organs becomes more elastic. c. of organs decreases. d. curve decreases but then increases. e. curve becomes backward bending.

Q: In the United States, it is against the law to buy or sell body organs. The consequence of this regulation is that the supply a. of organs becomes completely inelastic. b. of organs becomes completely elastic. c. of organs increases. d. curve decreases but then increases. e. curve becomes backward-bending.

Q: Marion fell out of a tree while bird-watching outside her home in Dijon, France. The bill from the hospital for putting a cast on her broken arm is estimated to be 2,000. This price for medical care was determined a. by the intersection of supply and demand, unfettered by government regulations. b. by the intersection of supply and demand, but the government played a significant role in increasing supply. c. by the intersection of supply and demand, but the government played a significant monopolist role to control costs. d. by the intersection of supply and demand, but the government played a significant monopsonist role to control costs. e. not at all by the role of the government as the primary payer of health care costs.

Q: After many years of medical training, Belinda has become a medical doctor in France. Which of the following statements is true? a. Belinda would expect to earn a lower salary than if she was a doctor in the United States because of government pressure to control costs. b. Belinda would expect to have an easy time getting patients because the government forces patients to see specific doctors. c. Belinda would expect to earn a higher salary than if she was a doctor in the United States. d. Belinda would expect patients to avoid coming to the doctor if they had a serious condition because of their inability to pay their medical bills. e. Patients will be generally dissatisfied with medical care because of the significant out-of-pocket costs they incur.

Q: When comparing the healthcare system in France with that in the United States, one of the key differences is that a. the French are able to obtain lower overall healthcare costs because the government is the only payer of healthcare expenses, and there is no private insurance. b. the French are able to obtain lower overall healthcare costs because the government pays for most medical care, and private health insurance is held by nearly all to cover the remainder of needed medical care. c. Americans are able to obtain lower overall healthcare costs because of the lack of government involvement. d. Americans are able to obtain lower overall healthcare costs because most people have insurance. e. the French are able to obtain lower overall healthcare costs because the French are discouraged from making use of costly procedures for serious healthcare conditions.

Q: As the government pays for an increasing portion of medical care expenses for citizens in the United States a. the governments monopsony power will grow and citizens will pay higher prices for medical care. b. the governments monopsony power will grow and citizens will pay lower prices for medical care. c. the governments monopoly power will grow and citizens will pay higher prices for medical care. d. the governments monopoly power will grow and citizens will pay lower prices for medical care. e. there will be no effect on the governments power to determine the prices paid for medical care.

Q: After many years of medical training, Quinn has become a medical doctor in Canada. Quinn would expect a. to earn a high salary when he opened his own private practice. b. to work in Canadian hospitals with very few doctors who were trained in the United States. c. to spend the majority of his time talking to health insurance companies to ensure that his patients receive the care that they need. d. to earn a salary similar to that earned by a doctor in the United States. e. a difficult time finding employment as a doctor given the abundance of trained individuals willing to be a doctor in Canada.

Q: Priscilla is a retired nurse from Toronto who fell out of a tree while bird-watching in Halifax, Nova Scotia (a Canadian province). The bill from the hospital for putting a cast on her broken arm is estimated to be $3,000 (Canadian). This price for medical care was determined a. by the intersection of supply and demand, unfettered by government influence. b. by the intersection of supply and demand, but the government played a significant role in imposing a payment limit through its monopsonist power. c. by the intersection of supply and demand, but the government played a significant role in imposing a payment limit through its monopolist power. d. by the involvement of the government and private health insurance companies. e. as higher than it should have been because of a shortage of care.

Q: Health care in Canada is rationed primarily by a. making the cost to the consumer as inexpensive as possible. b. making the cost to the insurance company as inexpensive as possible. c. the government deciding not to play an active role in the healthcare market. d. delays in receiving care. e. encouraging doctors to set up private practices that compete against hospitals.

Q: A key reason why Canadians might travel abroad for health care is because a. surgeries are too costly in Canada. b. the quality of health care at home is too low. c. there are too many doctors in Canada. d. the government is only willing to pay the full cost of medical care that is delivered in a country where treatment is less expensive. e. at home there are lengthy delays with some medically necessary operations.

Q: In a single-payer system, which of the following is true? a. The single payer is able to act as a monopsonist. b. Medical care tends to be rationed through pricing. c. Physicians wages are generally higher than in a multipayer system. d. The single payer is able to act as a monopolist. e. Medical care is available promptly to all who want it.

Q: Which of the following is true for a single-payer system? a. Medical care tends to be rationed through pricing. b. Medical care tends to be rationed with a waiting period. c. Physicians wages are generally higher than in a multipayer system. d. The single payer is able to act as a monopolist. e. Medical care is available promptly to all who want it.

Q: Health care has to be rationed because a. there are too many deliverers of health care. b. advances in medical research have slowed down. c. consumers are avoiding trips to the doctor. d. the supplier is acting like a monopoly and intentionally reducing the delivery of health care. e. the demand for health care exceeds the supply of health care at the prices imposed by the government.

Q: In which of the following countries is an individuals ability to pay the primary method of rationing health care?a. Norway b. United Kingdom c. Canadad. United Statese. France

Q: Cyril is a 70-year-old, retired grocery store owner from Brooklyn who fell out of a tree while bird-watching in upstate New York. The bill from the hospital for putting a cast on his broken arm is estimated to be $5,000. This price for medical care was determined by the a. intersection of supply and demand in an unfettered market. b. intersection of supply and demand, but the government played a significant role in increasing supply and imposing a payment limit through the Medicaid program. c. intersection of supply and demand, but the government played a significant role in reducing supply and imposing a payment limit through the Medicare program. d. involvement of the government through the Medicare program, and the cost was increased because hospitals are not required to deliver emergency room care to the uninsured. e. intersection of supply and demand, but the government played a rather insignificant role despite providing Medicare health insurance.

Q: Through the Medicaid program, the U.S. government is the primary provider of health insurance for the poor (although not all of the poor in need of health care insurance are able to participate in this program). In this situation, the government is a. a monopsonist that imposes price controls to reduce overall cost. b. a monopsonist that allows providers to charge whatever they want but imposes quality controls. c. a monopolist that imposes price controls to reduce overall cost. d. a monopolist that imposes price controls to increase overall quality. e. both a monopolist and monopsonist that makes active use of price controls.

Q: The U.S. governments Medicare program is the primary financier (or payer) of health insurance for the aged. In this situation, the government is a. a monopsonist that allows providers to charge whatever they want but imposes quality controls. b. a monopolist that imposes price controls to reduce overall cost. c. a monopsonist that imposes price controls to reduce overall cost. d. a monopolist that imposes price controls to increase overall quality. e. both a monopolist and monopsonist that makes active use of price controls.

Q: When healthcare costs are paid for by a. private insurance companies, the expenses are lower because the insurance company acts like a monopolist. b. the government, the expenses are lower because the government acts like a monopolist. c. the government through payroll taxes, the employer faces a disincentive to hire more workers. d. the government, the expenses are higher because the government acts like a monopsonist. e. private individuals, the expenses are higher because consumers are more responsive to the prices being charged.

Q: As the price of medical care rises, thea. quantity supplied increases. b. supply increases. c. demand increases.d. quantity demanded increases.e. supply curve decreases.

Q: A distortion in the health care market can occur when the a. existence of health insurance encourages consumers not to seek preventive care. b. involvement of the government raises healthcare expenditures because doctors are guaranteed a payment that exceeds the market equilibrium price. c. involvement of health maintenance organizations discourages efficiency in healthcare expenditures. d. governments licensing of medical care providers reduces supply, which, in turn, increases the equilibrium price. e. demand for health care is inelastic.

Q: A key reason why Americans might travel abroad for health care is because a. medical procedures are too costly in the United States. b. the quality of health care for certain procedures is too low in the United States. c. there are too few doctors in the United States. d. the government is only willing to pay the full cost of medical care that is delivered in a country where treatment is less expensive. e. the federal government is willing to cover healthcare costs regardless of where they are delivered.

Q: Use the following graphs to answer the following questions: A. B. C. D. E. Which graph best describes the demand for an elective surgery that is so price sensitive that doctors have to issue coupons to get more patients?a. Graph A b. Graph B c. Graph Cd. Graph De. Graph E

Q: One effect that insurance companies have on the overall cost for consumers or patients of health care is that they a. have no impact on costs. b. increase costs as hospitals are forced to go out of business. c. decrease costs as doctors quit and seek other occupations. d. decrease costs as patients seek less care. e. tend to increase costs as patients seek more care than they otherwise would.

Q: There is an increase in the number of individuals in the country who have insurance. Which of the following will occur now? a. The demand for health care will decrease, but not as much if deductibles and co-pays are used. b. The demand for health care will increase, but not as much if deductibles and co-pays are used. c. The demand for health care will be unaffected. d. Individuals will likely be discouraged from receiving preventive care. e. Whether individuals seek preventive care will be unaffected by whether an individual has insurance.

Q: What has happened to the elasticity of demand for health care over time? a. It has become more elastic. b. It has become more inelastic as people live longer and advances in medical technology are made. c. It has become more elastic as people face a shortened life span and advances in medical technology are made. d. It has become more inelastic as people face a shortened life span and advances in medical technology are made. e. The magnitude of elasticity has been constant over time.

Q: Use the following graphs to answer the following questions: A. B. C. D. E. Which graph represents what would happen if a medical procedure such as eye surgery previously paid for by insurance was no longer covered?a. Graph A b. Graph B c. Graph Cd. Graph De. Graph E

Q: Patients in need of an organ transplant often require years of weekly treatments to keep them healthy until a compatible organ is found. Because such maintenance care may last for years, the demand for treatment is a. more elastic than would be the case for an ailment that required stitches in a single office visit because of the long time horizon. b. more inelastic than would be the case for an ailment that required stitches in a single office visit because of the long time horizon. c. neither elastic nor inelastic. d. more elastic because of its necessity. e. more inelastic due to the fact that the supply of treatment is limited.

Q: While tossing a toy to her cat, Danika sprained her ankle. In regard to seeking medical care, Danikas demand for care is a. more elastic than if she had a sprained ankle as well as a severe wound requiring stitches. b. more inelastic than if she had a sprained ankle as well as a severe wound requiring stitches. c. completely inelastic. d. completely elastic. e. highly, but not completely, inelastic.

Q: While throwing a Frisbee to his dog, Fareem sprained his ankle. In regard to seeking medical care, Fareems demand for care is a. completely inelastic. b. completely elastic. c. more inelastic than it would be for a broken leg. d. more elastic than it would be for a broken leg. e. highly, but not completely, inelastic.

Q: Which of the following medical procedures would have the most inelastic demand?a. the removal of a healthy appendix b. plastic surgery c. a heart transplantd. a consultation about hair losse. immunization for the flu

Q: Which of the following statements is true? a. The demand for health care among healthy young adults is elastic. b. The demand for health care among healthy young adults is inelastic. c. The demand for health care among unhealthy older adults is elastic. d. The demand for health care among healthy older adults is inelastic. e. The degree of healthiness has no effect on the elasticity of demand for health care.

Q: As the price of medical care rises, thea. quantity supplied decreases. b. supply increases. c. demand increases.d. quantity demanded decreases.e. supply curve decreases.

Q: How do demand and supply influence the increasing cost of health care? a. Demand and supply have no influence over the price of health care. b. Demand is limited and supply is strong and inelastic. c. Demand and supply are both limited. d. The demand for health care is strong and inelastic, whereas supply is limited. e. The demand and supply for health care are both strong and inelastic.

Q: Many colleges and universities in the United States now require students to purchase health insurance. Such a requirement would a. decrease the demand for health care. b. increase the supply of health care. c. decrease the supply of health care. d. have no effect on the supply or demand for health care. e. lower the overall price for healthcare insurance as healthy college students are added to the pool of insured.

Q: What would happen to the price and quantity of medical services if an existing doctors office closed in a small town, ceteris paribus? a. Equilibrium price and quantity would rise because both supply and demand increased. b. Equilibrium price and quantity would fall because both supply and demand decreased. c. Equilibrium price would rise and quantity would fall because supply decreased and demand was constant. d. Equilibrium price and quantity would rise because demand decreased while supply was constant. e. Equilibrium price and quantity would fall because demand decreased and supply was constant.

Q: In an effort to reduce the federal budget deficit, Congress has decided to reduce the amount of money spent on Medicare and Medicaid. How does this affect the equilibrium price and quantity of medical services? a. They are not affected. b. They have risen as demand has increased, but supply has remained constant. c. They have fallen because demand has decreased and supply has remained constant. d. They have risen because supply and demand have decreased. e. Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

Q: The federal government has recently decided to expand the amount of prescription drug insurance offered to the elderly. How does this affect the price and quantity of medical services? a. Equilibrium price and quantity are not affected. b. Equilibrium price and quantity have risen because supply and demand have decreased. c. Equilibrium price and quantity have risen as demand has increased, but supply has remained constant. d. Equilibrium price and quantity have fallen because demand has decreased and supply has remained constant. e. Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

Q: As governor, Lynda has decided to balance the budget by reducing the number of people for whom the government provides health care. How does this affect the equilibrium price and quantity of medical services? a. They are not affected. b. They have risen as demand has increased, but supply has remained constant. c. They have risen because supply and demand have decreased. d. They have fallen because demand has decreased and supply has remained constant. e. Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

Q: As governor, Marcy has decided that anyone who works but earns less than $20,000 a year will have their health insurance premiums paid for by the government. How does this affect the equilibrium price and quantity of medical services? a. They are not affected. b. They have risen because demand has increased, but supply has remained constant. c. They have risen because supply and demand have decreased. d. They have fallen because demand has decreased and supply has remained constant. e. Equilibrium price has fallen and quantity has risen because demand decreased and supply has remained constant.

Q: Favorable tax policies have encouraged the construction of new hospitals in the United States. How does this affect the equilibrium price and quantity for medical services? a. They are not affected. b. They have risen because supply and demand have decreased. c. They have fallen because demand has decreased and supply has remained constant. d. Equilibrium price has fallen and quantity has risen as supply has increased, but demand has remained constant. e. Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

Q: After years of paying all healthcare expenses for employees, a citys largest employer has decided not to offer healthcare coverage anymore. The equilibrium price and quantity for medical services in the city would a. not be affected. b. rise because supply and demand would decrease. c. fall because demand would decrease and supply would remain constant. d. rise as demand would increase, but supply would remain constant. e. rise because demand would decrease and supply would remain constant.

Q: In a town with only one hospital, the largest employer (a local manufacturing plant) now offers health insurance to its employees. What would be the expected change to the price and quantity of medical services? a. Equilibrium price and quantity would not be affected. b. Equilibrium price and quantity would rise because supply and demand have decreased. c. Equilibrium price and quantity would fall because supply has decreased but demand has increased. d. Equilibrium price and quantity would rise because demand has increased but supply has remained constant. e. Equilibrium price would fall and quantity would rise because demand has decreased and supply has remained constant.

Q: After a natural disaster destroyed nine of the 10 hospitals in a city but injured only 1 percent of the population, what would you expect to happen to the price and quantity of medical services? a. There would be no expected changes to equilibrium price or quantity. b. Equilibrium price and quantity would rise because supply would slightly decrease and demand would dramatically increase. c. Equilibrium price and quantity would fall because supply would slightly decrease and demand would dramatically increase. d. Equilibrium price would rise because supply would significantly decrease and demand would increase only slightly. The effect on equilibrium quantity is ambiguous. e. Equilibrium price would fall and quantity would rise because demand would decrease and supply would remain constant.

Q: After a natural disaster destroyed one of the 10 hospitals in a city and injured nearly 75 percent of the population, what would you expect to happen to the price and quantity of medical services, ceteris paribus? a. There would be no expected changes to equilibrium price or quantity. b. Equilibrium price would rise because supply would slightly decrease and demand would dramatically increase. The effect on equilibrium quantity is ambiguous. c. Equilibrium price would fall because supply would slightly decrease and demand would dramatically increase. The effect on equilibrium quantity is ambiguous. d. Equilibrium price would rise and quantity would unambiguously fall because supply would slightly decrease and demand would dramatically increase. e. Equilibrium price would fall and quantity would unambiguously rise because demand would decrease and supply would remain constant.

Q: What would be the consequence of a law that forced patients to pay all of the costs for preventive care? a. The adverse selection problem would become more intense. b. The moral hazard problem would become more intense. c. The adverse selection problem would become less intense. d. The moral hazard problem would become less intense. e. Both the moral hazard and adverse selection problems would become more intense.

Q: What would be the consequence of a law that forced individuals to receive an annual preventive health checkup? a. The adverse selection problem would become more intense. b. The moral hazard problem would become more intense. c. The adverse selection problem would become less intense. d. The moral hazard problem would become less intense. e. Both the moral hazard and adverse selection problems would become less intense.

Q: What would be the consequence for insurance companies allowing patients as many treatments as they want? a. The principal-agent problem would become less severe. b. The adverse selection problem would become more severe. c. The moral hazard problem would become more severe. d. The adverse selection problem would become less severe. e. The moral hazard problem would become less severe.

Q: As the manager in an insurance company, Emanuel is responsible for reviewing the following two plans that he will offer to the public: 1. Low-deductible, high-premium health insurance plan 2. High-deductible, low-premium health insurance plan Which plan would someone choose if he or she were concerned that doctors may order too many tests? a. healthcare plan 1, because patients will first make sure that all tests are necessary when they must pay a substantial portion of the costs b. healthcare plan 2, because patients will first make sure that all tests are necessary when they must pay a substantial portion of the costs c. healthcare plan 2, because the insurance company will discourage doctors from ordering too many tests d. healthcare plan 2, because the threat of malpractice lawsuits will discourage doctors from ordering too many tests e. neither one, because they would not deal effectively with the problem

Q: As the largest employer in a small town, Carlyle may be more likely to take business risks because, if the company struggles, he might expect the local government to provide financial assistance. This situation reflects a(n) a. moral hazard problem that becomes an adverse selection problem. b. principal-agent problem that becomes a moral hazard problem. c. principal-agent problem. d. moral hazard problem. e. adverse selection problem.

Q: As the owner of a large manufacturing plant, Josephina has the following choice of health plans to offer her employees: 1. Low-deductible, high-premium health insurance plan 2. High-deductible, low-premium health insurance plan Which employer-provided and employer-subsidized health insurance plan would Josephina choose if she wants to keep her health care insurance subsidy as low as possible? a. healthcare plan 1, because most costs are covered by the employee and the employee is encouraged to visit the doctor only when it is necessary b. healthcare plan 2, because most costs are covered by the employee and the employee is encouraged to visit the doctor only when it is necessary c. healthcare plan 1, because this plan encourages healthy employees to get coverage and lowers the overall premium paid by all employees d. healthcare plan 2, because employees are encouraged to visit the doctor for all possible problems e. either one, because there should be no noticeable difference in overall health care costs associated with either health insurance plan

Q: Reese has a tendency to get very bored while he is driving his car and falls asleep behind the wheel. He has decided to seek the maximum amount of car insurance that he can obtain. What does this situation reflect? a. the problem of diminishing returns b. the problem of adverse selection c. the principal-agent problem d. the problem of moral hazard e. an adverse selection problem that became a principal agent problem

Q: As the owner of a business that sells alarm clocks, Jaslene wants to hire workers who will sell as many of these clocks as possible. If Jaslene perceives the moral hazard to be strong among her sales employees, what could she do to minimize it? a. offer a significant signing bonus b. offer a constant hourly wage c. offer a constant yearly salary d. pay employees a percentage of their sales e. conduct a lengthy interview process

Q: After Luis received health insurance from his job as an accountant, he decided to become a skydiver on the weekends because he knew that his health insurance from his employer would cover most of his medical costs if he were injured. Which of the following statements is true? a. The moral hazard problem increased in intensity. b. The moral hazard problem decreased in intensity. c. The principal-agent problem became more severe. d. The principal-agent problem became less severe. e. The adverse selection problem became more severe.