People with Hidden Health Problems Are More Likely to Buy

question 19

Multiple Choice

People with hidden health problems are more likely to buy health insurance than are other people. This is an example of

• A)moral hazard and makes the cost of health insurance higher than otherwise.
• B)moral hazard and makes the cost of health insurance lower than otherwise.
• C)adverse selection and makes the cost of health insurance higher than otherwise.
• D)adverse selection and makes the cost of health insurance lower than otherwise.

Differentiate between explicit and implicit costs and their importance in understanding economic and accounting profits.

Recognize the implications of sunk costs in economic decisions.

Understand the application of marginal analysis in "either-or" decisions.

Understand the relationship between marginal costs and production levels.

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Definitions:

Bribe

An illegal or unethical payment made to influence someone's behavior in favor of the payer, often to gain some form of advantage.

Government Contracts

Government contracts are agreements between businesses and government entities for the provision of goods and services.

Herfindahl-Hirschman Index

A measure of market concentration used to evaluate the potential for anti-competitive behavior, calculated by summing the squares of the market shares of all firms within the industry.

Industry

A collective term for all manufacturing and production activities within an economy.