QUESTION 1 1. Moral hazard can result from being uninsured having no insurance t
ID: 1192337 • Letter: Q
Question
QUESTION 1
1. Moral hazard can result from
being uninsured
having no insurance to having partial insurance
having no insurance to having full insurance
having lousy insurance to having better insurance from the perspective of the patient
b, c, and d
3 points
QUESTION 2
When moral hazard occurs, the immediate impact is that p (or the probability of the risk)
decreases
increases
is not affected
none of the above
3 points
QUESTION 3
Nik Walenda who walks the tightropes across buildings, over the grand canyon, and over niagara falls, will not do these things if his group is unable to get insurance before these events. An approved insurance policy is one of their absolute basic requirements before these very risky activities are undertaken. This is an example of insurance causing
ex post moral hazard
ex ante moral hazard
natural hazard
medical arms race
none of the above
3 points
QUESTION 4
When Indira's child was diagnosed with ear infection, the doctor was going to recommend either Cefaclor or the cheaper Amoxicillin. They are equally as effective.
The doctor gave this information to Indira. In addition the doctor also said that her insurance will cover both and her copay will be the same for either one.
Indira chooses the more expensive Cefaclor. This is a case of
ex post moral hazard
ex ante moral hazard
natural hazard
coinsurance
deductible
3 points
QUESTION 5
If the original price of medical care (with no insurance) equal $1,000, the quantity demanded = 10. If insurance is provided, out of pocket drops to $300. Also the
quantity of medical care that will be demanded rises to 40. Is there a social loss due to insurance?
yes
no
not enough information
none of the above
3 points
QUESTION 6
From the previous problem if there is social loss how much is it?
there is no social loss
$21,000
$10,500
$3,500
3 points
QUESTION 7
Which situation provides the potential for the largest social loss due to insurance?
large price distortion and steep demand curve
small price distortion and steep demand curve
small price distortion and steep demand curve
large price distortion and relatively flat demand curve
3 points
QUESTION 8
Marcus and Jameis have identical insurance policies except that Marcus coinsurance rate is 20% while Jameis coinsurance rate is 18%. Whose policy will create a greater social loss or moral hazard?
Marcus
Jameis
both create identical social losses
none of the above
3 points
QUESTION 9
Trey and Elijah have identical insurance policies except that Trey's copay is $20 while Elijah's copay is $18. Whose policy will create a greater social loss or moral hazard?
Trey
Elijah
they will cause identical social losses
none of the above
3 points
QUESTION 10
Donald and Ben have identical insurance policies except that Donald has a deductible of $1,000 while Ben's deductible is $1,800. Whose policy will create a greater social loss or moral hazard?
Donald
Ben
Mario
Jeb
Carly
3 points
a.being uninsured
b.having no insurance to having partial insurance
c.having no insurance to having full insurance
d.having lousy insurance to having better insurance from the perspective of the patient
e.b, c, and d
Explanation / Answer
1. Moral hazard can result from having lousy insurance to having better insurance from the perspective of the patient. Moral hazard is when the perfect information in available with the insured about the occurrence of an event and the insurer does not have similar or perfect information. This increases the risk of the insurer.
2.When moral hazard occurs the probability of risk will always increase.
3. Ex-ante moral hazard situation is when a person gets insured and then starts to indulge in dangerous and life threatening activities. In these types of cases the premium is often high than normal cases.
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