The Pre-Existing Condition Insurance Plan Is a Federally Administered Part

question 15

Multiple Choice

The Pre-Existing Condition Insurance Plan is a federally administered part of the Affordable Care Act, and is designed for people with pre-existing medical conditions to obtain insurance.By offering health insurance to all U.S.citizens with pre-existing medical conditions, the Pre-Existing Condition Insurance Plan eliminates ________ for both the insurer and the insured, and eliminates ________ for the issuer of the insurance policy.

• A)the principal-agent problem; moral hazard
• B)asymmetric information; adverse selection
• C)adverse selection; the principal-agent problem
• D)moral hazard; adverse selection

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Definitions:

Marginal Benefit

The additional satisfaction or utility gained from receiving or consuming one more unit of a good or service.

Marginal Cost

The cost of producing one additional unit of a product or service, a key concept in economic theory for decision-making and pricing.

Monopolists

Entities that are the sole providers of a product or service in a market, allowing them to control prices and output levels.

Profit-Maximizing Output

The production level at which a business attains its greatest possible earnings.