Question 1
Relating to the
Economics in Practice on page 356: Huntington's disease is an inheritable disorder which affects 1 in 10,000 individuals, and since 1993 there has been a test that perfectly predicts the disease. Presently, insurance companies are not legally allowed to inquire about the results of genetic tests. This has led to ________ favoring potential insurance buyers.
◦ moral hazard
◦ asymmetric information
◦ market signaling
◦ adverse selection
Question 2
Relating to the
Economics in Practice on page 356: A long-term study of Huntington's disease patients found that individuals who carry the Huntington's disease genetic mutation are up to five times as likely as the general population to buy long-term care insurance. This is an example of ________ in the health insurance market.
◦ moral hazard
◦ risk-loving
◦ adverse selection
◦ market signaling
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