Exam 16: Information, Risk, and Insurance

Why has there been a shift away from the traditional fee-for-service structure in the U.S. health care?

State insurance regulators have sometimes reacted by passing rules that attempt to set low premiums for insurance. But over time, ___________________________ must hold: the average amount received by individuals must equal the average amount paid in premiums.

Ryan lives in Iowa and is completing his fourth year of electrician apprenticeship training. After achieving journeyman status, what will Ryan require from his state government in order to practice his trade?

_____________________ can lead to a situation where, even if sellers are faced with a situation of _______________, they will decide not to cut prices for awhile because they know that buyers in this situation will not react by purchasing a _______________ .

The problem of ________________ in insurance markets is that insurance companies are unable to ______________ .

An insurance company is likely to believe that having a major accident is a signal of being a _____________, and thus try to _________________.

Martha has decided to purchase a new home constructed by Crown Builders. In addition to Crown Builder's good reputation in the industry, which of the following likely influenced Martha's decision to purchase a new home?

The presence of _____________________ in transactions involving goods can easily cause a ______________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, both the demand and supply of products in good condition will shift due to the improved information, causing quantity to _________ and price to _______________.

When people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring is called a _____________________ .

Regardless of how many services are provided, a health maintenance organization provides health care and is paid ___________________ per person enrolled in the plan.

When buyers use ___________________ to draw inferences about the quality of products, then markets may have trouble reaching _________________ and quantity.

_________________ in the insurance industry prevents premiums from being much higher than the___________ level in the long term.

A ________________ exists when the buyer pays an extra amount and the seller agrees to fix anything that goes wrong for a set time period.

How do insurance companies reduce the risk of moral hazard?

Banks are required by law to pay a small fraction of their deposits to the _______________, which goes into a __________ fund that is used to repay depositors their money if the bank should go bankrupt.

Briefly explain the purpose of a lender requiring a pledge of collateral from a borrower in exchange for a loan.

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, the supply of products in good condition will likely __________ due to the improved information, causing price to __________ .

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, both the demand and supply of products in good condition will shift due to the improved information. If supply shifts by more than demand, quantity will _____________ and price will _____________.

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, demand and supply of products in good condition will shift due to the improved information. If the quantity demanded shifts by more than supply, quantity will likely ___________ and price will likely ___________.