Suppose You Go from Being Uninsured to Buying a Health

question 14

Multiple Choice

Suppose you go from being uninsured to buying a health insurance policy.You respond by jumping out of a perfectly good airplane for the first time-attached to a parachute,of course.This behavior is best characterized as:

• A) adverse selection.
• B) means testing.
• C) moral hazard.
• D) X-inefficiency.

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Definitions:

Sunk Costs

Expenses that have already been incurred and cannot be recovered.

Opportunity Costs

The cost of opting for one choice over another, representing the benefits missed out on when choosing one alternative over another.

Taxes

Compulsory financial charges or levies imposed by a government on individuals, corporations, and transactions to fund public expenditures.

Capital Investment

Funds invested in a business or project with the expectation of generating income or profit over the long term.