-Refer to Exhibit 4-3

question 116

Multiple Choice

-Refer to Exhibit 4-3.Which of the following is true?

• A) If price P₁ is set as a price ceiling,the price ceiling will have an effect on the market for good X.
• B) If price P₁ is set as a price floor,the price floor will have an effect on the market for good X.
• C) Price P₁ is the equilibrium price for good X.
• D) If price P₁ is set as a price floor,then it is the highest price that can legally be charged in the market for good X.

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Definitions:

Adverse Selection

A situation in markets where buyers and sellers have access to different information, leading to transactions where one party may be at a disadvantage, often discussed in the context of insurance and used cars.

Individual Mandate

A requirement that individuals purchase health insurance or pay a penalty, aimed at ensuring universal coverage in health care systems.

Health Insurance Market

The marketplace where individuals, families, and employers purchase health insurance coverage.

Long-term Care Insurance

Insurance coverage designed to cover the costs of long-term care services, including both medical and non-medical needs for people with a chronic illness or disability.