How Does the Federal Government Avoid the Asymmetric Information Problem

question 16

Multiple Choice

How does the federal government avoid the asymmetric information problem associated with providing health care to people over 65 years of age?

• A) Health care is standardized and is the same for all people over 65 years of age.
• B) Health insurers rely on the reputation of the covered individuals.
• C) Participation in the Medicare program is mandatory for all people over 65 years of age.
• D) Health information about people enrolled in the Medicare program is publically available.

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Definitions:

FedEx

An American multinational delivery services company known for its overnight shipping service and pioneering a system that could track packages and provide real-time updates on package location.

Package Tracking

A service provided by postal and courier companies that allows customers to follow the geographic location and status of their shipped items through a unique tracking number.

Short Run

A time period in economic theory during which some factors of production are fixed, affecting the decision-making process of businesses.

Long Run

A period of time in which all factors of production and costs can be fully adjusted, unlike the short run where some factors are fixed.