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True or false: An insurance company will cover a particular medical treatment when the marginal benefit...

True or false: An insurance company will cover a particular medical treatment when the marginal benefit to the consumer of insuring the treatment is less than the marginal cost to the insurer of providing insurance. Please provide a detailed explanation for your answer.

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Answer #1

It is not true

insurance company is using marginal analysis where the marginal benefit should be greater than the marginal cost or at least should be equal to it. If the marginal benefit to consumer of insurance treatment is less than the marginal cost of providing insurance to the company, then the consumer will not make a purchase. only in the case when the marginal cost of insurance provision is less than the marginal benefit or is equal to it, that the insurance company will cover the treatment.

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