Adverse selection in a competitive market for health insurance causes A. relatively unhealthy people to not...

Adverse selection in a competitive market for health insurance causes

A. relatively unhealthy people to not buy insurance, and premiums to rise creating market failure.

B. only relatively healthy people to buy insurance, and premiums to fall creating market failure.

C. relatively healthy people to not buy insurance, and premiums to rise creating market failure.

D. relatively unhealthy people to buy insurance, and premiums to fall creating market failure.

Solutions

Expert Solution

Adverse selection in a competitive market for health insurance causes relatively unhealthy people to buy insurance, and premiums to fall creating market failure since insurance sellers have lesser information about the health of the people than the people themselves.

Rahul Sunny answered 1 year ago

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