Question

Health care reform will lead to a(n) ____ in the number of new, young health care recipients which will cause the ____ of moral hazard problems associated with health insurance.

Select one:

A. increase; worsening

B. increase; elimination

C. decrease; worsening

D. decrease; elimination

Health care reform will lead to a(n) ____ in the number of new, young health care recipients which will cause the ____ of moral hazard problems associated with health insurance.

Select one:

A. increase; worsening

B. increase; elimination

C. decrease; worsening

D. decrease; elimination

Because of the owner's prejudice, a firm chooses to discriminate against hiring Asian workers. Compared to an otherwise identical, nondiscriminating firm in the same competitive market, the discriminating firm will:

Select one:

A. receive higher profits.

B. receive lower profits.

C. incur higher costs.

D. be characterized by both higher costs and lower profits

Answer 1

1. B. increase; elimination

Explanation: In moral hazard, people with health conditions are more likely to avail insurance. The reform would encourage more young people to subscribe and this will eliminate the moral hazard problem.

2.  B. increase; elimination

Explanation: In moral hazard, people with health conditions are more likely to avail insurance. The reform would encourage more young people to subscribe and this will eliminate the moral hazard problem.

3. D. be characterized by both higher costs and lower profits

Explanation: This firm will be more inefficient and it will incur a higher cost.