Suppose there are two types of people who need health insurance; high-risk and low-risk consumers. H Show more Suppose there are two types of people who need health insurance; high-risk and low-risk consumers.
Suppose there are two types of people who need health insurance; high-risk and low-risk consumers. H Show more Suppose there are two types of people who need health insurance; high-risk and low-risk consumers.
High-risk consumers have a relatively high probability of needing expensive medical care and on average incur $2000 of medical expenses per year. The high-risk consumers would be willing to pay up to $2500 for insurance that covers all their medical bills. Low-risk consumers would be willing to pay up to $1400 for full-coverage insurance and on average would incur on average $1200 in medical bills. Assume 1/3 of all consumers are high-risk and the remaining 2/3 of consumers are low-risk. Consumers know whether they are high-risk or low-risk. The insurance company knows 2/3 of all consumers are low-risk but cannot identify which consumers are low-risk. If all consumers bought insurance what price must the insurance company charge to break even in expectation? That is what price must the insurance company charge so that the expected payments equals the premium? Which consumers would purchase insurance at that price? Are there wealth-creating transactions that are not consummated because of the information asymmetry? If the low-risk consumers were willing to pay $1500 for the insurance how would your answers to questions 2 and 3 change? Show less
Having Trouble Meeting Your Deadline?
Get your assignment on Suppose there are two types of people who need health insurance; high-risk and low-risk consumers. H Show more Suppose there are two types of people who need health insurance; high-risk and low-risk consumers. completed on time. avoid delay and – ORDER NOW
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Order Now and we will direct you to our Order Page at Litessays. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.