Continuing with the same vacation-insurance company from the preceding question, what vacation-day price(s) would be acceptable to both the family and the insurance company?
a. 2 only
b. 3 only
c. 2 or 3
d. 4
QUESTION 2A characteristic of outsourcing is
a. completely unrelated to vertical integration
b. likely to be profitable exactly when vertical integration is unprofitable
c. it prevents a firm from focusing on its core competencies
d. it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain
QUESTION 3The Medicare pay-as-you-go system is jeopardized by
a. an overly generous fee schedule that pays physicians more than private insurance for most procedures.
b. the changing demographics of the U.S. population with an increasing percentage over the age of 65
c. a reliance on the premiums paid by the elderly themselves to fund a majority of the total cost of the system.
d. allowing physicians to balance bill their patients.
e. the rising costs of long-term care.
QUESTION 4Continuing with the same family from the preceding question, suppose a risk neutral insurance company exists to provide vacation insurance. Suppose further that each vacation day requires a constant expenditure, and this expenditure is standard across everybody. This allows us to simplify the problem by considering all payments to be in terms of vacation days. What is the least the insurance company would charge (in terms of vacation days)?
a. 1
b. 2
c. 3
d. 4
QUESTION 5A characteristic of outsourcing is
a. essentially the opposite of vertical integration
b. likely to be profitable exactly when vertical integration is profitable
c. it prevents a firm from focusing on its core competencies
d. it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain