Self insurance refers to: the practice of setting aside funds to pay for medical care expenses instead of paying premiums to an insurance company. Approximately, _______ of all employees who participate in group insurance plans work for firms that self-insure.
a. starting one's own insurance company
b. buying insurance from a not for profit entity
c. setting aside fund to pay for medical care expenses instead of buying insurance
d. none of these
e. both a and b
QUESTION 2When an individual's wage rises, the substitution effect tends to:
a. increase hours worked.
b. decrease hours worked.
c. leave hours worked unchanged.
d. an impossible prediction about what will happen to hours worked.
QUESTION 3An example of moral hazard is
a. people drive as carefully in icy conditions with antilock brakes as without
b. people drive less safely with more airbags as without
c. football players avoid 'spearing' with their heads even with safer helmets
d. people read the medicine warnings as carefully when self-medicating versus with a doctor's prescription
QUESTION 4Economists use the term marginal to describe costs and benefits
a. that are minimal and hardly worth noting.
b. that are incremental and thus relevant to decision making.
c. that are noteworthy but not the most important.
d. whose importance can be minimized through hard work.
e. none of the above.
QUESTION 5If an individual is maximizing his or her utility, his or her marginal rate of substitution of leisure hours for consumption will be:
a. equal to one divided by his or her wage rate.
b. greater than one divided by his or her wage rate.
c. equal to his or her wage rate.
d. less than his or her wage rate.
QUESTION 6An example of moral hazard is
a. people drive less carefully in icy conditions with antilock brakes as without
b. people drive as safely with more airbags as without
c. football players avoid 'spearing' with their heads even with safer helmets
d. people read the medicine warnings as carefully when self-medicating versus with a doctor's prescription
QUESTION 7Which of the following statements is based on positive analysis?
a. Individuals without health insurance have less access to physicians' services than those who have health insurance.
b. The high cost of health insurance places U.S. firms at a competitive disadvantage with their foreign competitors.
c. Employers should be required to provide health insurance for all full-time workers and their dependents.
d. none of the above.
e. Both a and b.
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