Many Health Insurers Require a Deductible Where the Policyholder Pays

question 118

Multiple Choice

Many health insurers require a deductible where the policyholder pays the first part of any loss. The use of a deductible most directly treats the problem of:

• A) free riding.
• B) adverse selection.
• C) people going uninsured.
• D) moral hazard.

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Definitions:

Profit-maximizing

The method a company uses to identify the pricing and production volume that maximizes profit.

Marginal Product

The additional output that is produced by using one more unit of a factor of production, all else held constant.

Elasticity

Elasticity measures the responsiveness of the quantity demanded or supplied of a good or service to a change in its price or other factors like income.

Resource Demand

The demand for resources (labor, capital, land) that are used to produce goods and services.