Answer to Question 1
Adverse selection occurs when one agent in a transaction knows about a hidden characteristic of a good and this information causes him or her to select in and out of markets. In health insurance markets, buyers have private information that sellers (health insurance companies) do not. Insurance companies would like to attract more low-risk individuals than high-risk individuals who are more likely to need expensive treatment. Since the company does not know how risky an individual is, it may charge higher premiums because it expects to attract many high-risk individuals, but then these higher premiums might discourage low-risk individuals from seeking health insurance. This leads to even higher premiums. In theory, insurance companies could end up charging such high premiums that no one except very high-risk people are insured. Therefore, adverse selection causes the market to shut down almost completely.
Answer to Question 2
A
Altruistic behaviour or kin selection?
Two important changes occur in the upper airway in croup:The epiglottis swells, thereby occluding th
Ectopic pregnancies. (a) An ectopic pregnancy may occur in any of the locations shown. Interstitial
Common Physical and Mental Health Problems of Different Cultural Groups
Medications That May Cause Myopathy as an Adverse Effect
Environmental Health