Some health insurance companies pay only 70-80 of the medical ...

[moongchi]

Some health insurance companies pay only 70-80 of the medical cost incurred by their customers. What is the reason for this?
 
  What will be an ideal response?

Question 2

If an external benefit is present in the consumption of a good or service, then
 
  A) there can be no external cost.
  B) the marginal social benefit is greater than the marginal private benefit.
  C) the marginal social benefit is equal to the marginal private benefit.
  D) the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
  E) the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.

[mfedorka]

Answer to Question 1

Medical insurance companies often do not pay the entire medical cost incurred by their customers. This is because if the insurers do not have to pay the entire amount of medical cost incurred by them, the customers are more likely to take better care of themselves because they have to bear a part of the medical cost in case of an illness.

Answer to Question 2

B