In the Above Figure, an Increase in Productivity

question 8

Multiple Choice

In the above figure, an increase in productivity

• A) shifts the supply curve from S to S2.
• B) results in a movement from point b to point a.
• C) shifts the supply curve from S to S1.
• D) results in a movement from point a to point b.
• E) has no effect.

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Definitions:

Health Insurance

Insurance that reimburses the policyholder for expenses related to medical and surgical care.

Community Rating

An insurance pricing strategy which sets premiums based on the collective risk profile of a community or geographic area rather than individual risk factors, often used in healthcare insurance.

Adverse Selection

A situation in which asymmetric information leads to a selection of undesirable outcomes, such as in insurance markets.

Moral Hazard

The situation where one party is more likely to take risks because the consequences of those risks will be felt by another party.