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.

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Definitions:

Bakery

A bakery is a business establishment that produces and sells flour-based food baked in an oven such as bread, cookies, cakes, pastries, and pies.

Exchange

An exchange is a marketplace where securities, commodities, derivatives, and other financial instruments are traded.

Paying Cashier

A cashier responsible for handling cash transactions and payments within a retail or other business environment.