One result of asymmetric information in health insurance markets is

One result of asymmetric information in health insurance markets is
 a. an optimal number of insurance policies sold.
  b. adverse selection.
  c. externalities in consumption.
  d. a low marginal benefit of additional information for the buyer of insurance.
  e. The principal-agent problem.

QUESTION 2

Consider four possible benefits of a water resources project: I. Provides employment to construction workers currently building houses. II. Provides electric power to the market. III. Provides reduced flood risk to individuals living along the river. IV. Raises the profits of MacDonald's stands in the area which serves construction workers. Which of these are true social benefits of the project?
 a. All of them
  b. I, II, and III, but not IV
  c. I and III, but not II and IV
  d. II and III, but not I and IV

QUESTION 3

The conflict between the Vice President of Marketing and her sales staff arises because
 a. the sales staff are unwilling to offer discounts
  b. the Vice President does not want to negotiate aggressively enough
  c. the sales staff do not want to negotiate too aggressively
  d. the Vice President is more willing to offer discounts to make the sale

QUESTION 4

People buy insurance
 a. because they are risk averse.
  b. to defer consumption.
  c. because of externalities.
  d. to maximize their welfare.
  e. to ensure against poor health.

QUESTION 5

Some economists have hypothesized that government bureaucracies seek to maximize:
 a. social well-being.
  b. gross national product.
  c. fringe benefits for bureaucrats.
  d. their own budgets.

QUESTION 6

The conflict between the Vice President of Marketing and her sales staff arises because
 a. the sales staff are too willing to offer discounts
  b. the Vice President does not want to negotiate aggressively enough
  c. the sales staff want to negotiate too aggressively
  d. the Vice President is more willing to offer discounts to make the sale

QUESTION 7

Premiums based on experience ratings
 a. are uniform across age groups.
  b. are based on the loss experience of the insured.
  c. vary depending on the income of the insured.
  d. are illegal in most states in the U.S.
  e. are only used in property-casualty insurance underwriting.

QUESTION 8

Special interest groups often:
 a. represent broad questions of public interest.
  b. pursue rent seeking behavior.
  c. do not use lobbying techniques.
  d. have no effect on the political process.