Because People with Hidden Health Problems Are More Likely to Buy

question 103

Multiple Choice

Because people with hidden health problems are more likely to buy health insurance than are other people,

• A) the price of health insurance reflects the costs of a sicker-than-average person.
• B) the price of health insurance is too low, relative to the socially-optimal price.
• C) people in average health may be encouraged to buy too much health insurance, relative to the socially-optimal quantity.
• D) the Condorcet Paradox suggests that people who are sicker than average will ultimately buy more health insurance.

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Definitions:

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated, making it difficult to interpret the effect of independent variables on the dependent variable.

Independent Variables

Independent variables are variables in a study or experiment that are manipulated or changed to observe their effect on dependent variables.

Multicollinearity

A situation in statistical modeling where two or more predictors are highly correlated, making it difficult to discern their individual effects on the dependent variable.

Regression Coefficients

Values that represent the relationship between a dependent variable and one or more independent variables in regression analysis.