Public FinanceFinal Exam-Quiz 5 UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
An actuarially fair premium is set equal to the insurer's: expected payout, assuming no administrative costs or profits.
expected payout, assuming no administrative costs or
profits.
expected administrative costs, assuming maximum profits.
desired amount of profit.
total costs.
Asymmetric information between buyers and sellers adverse selection.
results in:
adverse selection.
rent seeking.
moral hazard.
X-inefficiency
, If government intervenes in the market for health there will likely be some redistribution from low-risk individuals to high-risk
insurance in order to address the adverse selection individuals.
problem and improve efficiency:
there will likely be some redistribution from high-risk
individuals to low-risk individuals.
there will likely be some redistribution from low-risk
individuals to high-risk individuals.
everyone will be better off as a result.
everyone will be worse off as a result.
If government subsidizes the health insurance costs of paternalism
individuals because individuals do not sufficiently realize
the importance of having health insurance, which
justification for government intervention is being used?
high administrative costs
redistribution
paternalism
adverse selection
If the government mandates that everyone have auto externalities
insurance because uninsured motorists cost other drivers
money through higher premiums, which justification for
government intervention is being used?
redistribution
paternalism
externalities
adverse selection
If the government pays part of the health care costs of redistribution
citizens determined by the government to be unlucky,
which of the following justifications for government
intervention is being used?
high administrative costs
redistribution
paternalism
externalities
ANSWERS
An actuarially fair premium is set equal to the insurer's: expected payout, assuming no administrative costs or profits.
expected payout, assuming no administrative costs or
profits.
expected administrative costs, assuming maximum profits.
desired amount of profit.
total costs.
Asymmetric information between buyers and sellers adverse selection.
results in:
adverse selection.
rent seeking.
moral hazard.
X-inefficiency
, If government intervenes in the market for health there will likely be some redistribution from low-risk individuals to high-risk
insurance in order to address the adverse selection individuals.
problem and improve efficiency:
there will likely be some redistribution from high-risk
individuals to low-risk individuals.
there will likely be some redistribution from low-risk
individuals to high-risk individuals.
everyone will be better off as a result.
everyone will be worse off as a result.
If government subsidizes the health insurance costs of paternalism
individuals because individuals do not sufficiently realize
the importance of having health insurance, which
justification for government intervention is being used?
high administrative costs
redistribution
paternalism
adverse selection
If the government mandates that everyone have auto externalities
insurance because uninsured motorists cost other drivers
money through higher premiums, which justification for
government intervention is being used?
redistribution
paternalism
externalities
adverse selection
If the government pays part of the health care costs of redistribution
citizens determined by the government to be unlucky,
which of the following justifications for government
intervention is being used?
high administrative costs
redistribution
paternalism
externalities
