The Cost of Group Health Insurance Is Lower Than If

question 151

Multiple Choice

The cost of group health insurance is lower than if an individual buys a policy on his own because

• A)the problem of adverse selection is reduced.
• B)moral hazard costs of a group tend to move to a low average.
• C)it is easier for the company to deny claims from a large group.
• D)insuring a group eliminates the problem of buyers having more information than the seller.

Know how to classify different accounts into their correct categories (Assets, Liabilities, Stockholders' Equity, Revenues, Expenses).

Grasp the concept of horizontal analysis and its application in comparing financial statements.

Understand the effects of transaction corrections on account balances.

Distinguish between the normal balance sides of different accounts and correctly classify them as debit or credit side balances.

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Definitions:

Budget Constraint

A concept in economics that represents all the combinations of goods and services a consumer can afford given their income and the prices of goods and services.

Horizontal Axis

In a graph or chart, the x-axis that runs from left to right, commonly used to represent the independent variable.

Vertical Axis

A line or reference point on a graph or chart that typically represents the dependent variable or outcome in an analysis.

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from consuming one more unit of a good or service.