1. People buy insurance
- because of externalities.
- to maximize their welfare.
- because they are risk averse.
- to defer consumption.
2. One result of asymmetric information in health insurance markets is
- externalities in consumption.
- an optimal number of insurance policies sold.
- adverse selection.
- a low marginal benefit of additional information for the buyer of insurance.
3. The highest incidence of those without health insurance occurs in which age category?
- 45-64 years of age.
- Over 65 years of age.
- Under 18 years of age.
- 18-34 years of age.
- 35-44 years of age.
4. Many individuals without health insurance receive "free" care. What are the sources of most of the care they receive?
- Private, for-profit hospitals.
- Multi-specialty physicians' practices.
- Public hospitals and clinics.
- Private, not-for-profit hospitals.
- Solo practitioners and their associates.
5. A major factor contributing to the growth in employee-based health insurance in the United States has been
- legislation requiring all firms to provide health insurance to all full-time workers.
- the long standing tradition in the United States of providing a generous package of benefits to all workers.
- greater than average economic growth leading to increased demand for labor.
- the tax free treatment of health insurance as an employee benefit.
6. A group of 100 people seek out an insurance company to underwrite health insurance for its members. If expected medical spending for the group is $150,000, what will the average premium be if the health insurance company estimates the premium adding net loading costs of 20 percent?
- $1,800
- $3,000
- $1,200
- $1,500