Private Information

question 85

Multiple Choice

Private information

• A) can create adverse selection but plays no role in creating moral hazard.
• B) explains why drivers screen auto insurance companies.
• C) means that unless it is overcome, the equilibrium in the market will be a separating equilibrium.
• D) plays a role in the markets for health-care insurance and auto insurance.
• E) cannot explain why the U.S. expenditures on health care per person exceed those in other major nations.

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Definitions:

Physical Dependence

A physiological state of adaptation to a specific substance, resulting in withdrawal symptoms when the substance is reduced or discontinued.

Schizophrenia

A mental disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.

Genetically Predisposed

Refers to the likelihood of inheriting specific traits, behaviors, or conditions based on one's genetic makeup.

Smoking Marijuana

The act of inhaling smoke or vapors released by heating the flowers, leaves, or extracts of the cannabis plant.