In the Health Insurance Market, Adverse Selection Occurs When

question 74

Multiple Choice

In the health insurance market, adverse selection occurs when

• A) chronically ill people buy health insurance.
• B) insured people go to the doctor unnecessarily.
• C) patients sue their doctor.
• D) people with health insurance tend to behave more recklessly.

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Definitions:

Progressive Tax

Progressive tax is a taxation system where the tax rate increases as the taxable amount or income increases, placing a higher burden on those with higher incomes.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), essentially reflecting the percentage of income that is paid in taxes.

Marginal Tax Rate

The rate at which the next dollar of taxable income is taxed.

Taxable Income

The amount of an individual's or entity's income used as the basis for calculating how much tax they owe to the government, after deductions and exemptions.