Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

Suppose your company is considering three health insurance policies. The first policy requires no tests and covers all preexisting illnesses. The second policy requires that all covered employees test negative for the HIV virus. The third policy does not cover HIV- or AIDS-related illnesses. All insurance policies are priced at their actuarially "fair" value. All individuals are slightly risk averse. An individual with the HIV virus requires, on average, $100,000 worth of medical care each year. An individual without the virus requires, on average, $500 worth of medical care each
year. a. Suppose that the incidence of HIV in the population is 0.005. find out the annual premium of the first policy. (Hint: Adverse selection.) b. If you don't have insurance that covers HIV-related illnesses, the probability of getting HIV is 1%. If you have insurance that covers HIV-related illness, suppose that the probability of getting HIV is 2%. find out the premium of the second policy. Show your calculations.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M946996

Have any Question?


Related Questions in Microeconomics

Question grade-school education is said to yield a

Question: Grade-school education is said to yield a beneficial externality because all of us benefit from interacting with people who know basic reading and writing. Assuming that this is true, make a case for providing ...

Question what is marketing myopia and how can it be

Question: What is marketing myopia, and how can it be avoided? What is customer-perceived value, and what role does it play in customer satisfaction? Explain the roles of market segmentation, market targeting, differenti ...

Question the material in this chapter did not focus on

Question: The material in this chapter did not focus on different methods of predicting inflation because the core rate has changed very little since 1982. The biggest change has been 1.1%, and the average change has bee ...

Question what is the difference between endogeneity and

Question: What is the difference between endogeneity and spurious correlation? Explain how independent and dependent variables are related to one another, making reference to causal arguments. The response must be typed, ...

Question consumer reports has hired you to study gas

Question: Consumer Reports has hired you to study gas mileage obtained by the new Federico Fellini Fuel-Efficient Ferrari. Specifically, you are asked to test the manufacturer's claim that, on aver-age, the car travels 3 ...

Question many firms offer employees various perks for

Question: Many firms offer employees various "perks" for working for their firm. Often times these benefits are in the form of discounts at restaurants, movie theaters, zoos, museums, etc. You collect data and estimate t ...

Question rent controls that are set below market

Question: Rent controls that are set below market equilibrium prices can help ensure that poorer people will be able to obtain living space on reasonable terms. Does this make sense? The response must be typed, single sp ...

Question 1- marketing of unsought goods is ethical or not

Question: 1- Marketing of unsought goods is ethical or not? Give example of unsought goods? 2- Why international guarantee and warranty use in UAE? The response must be typed, single spaced, must be in times new roman fo ...

Question 1 suppose the velocity of money is constant and

Question: 1. Suppose the velocity of money is constant and potential output grows by 3% per year. By what percentage should the money supply grow in order to achieve the following inflation rate targets? 2. Suppose the v ...

Question the following diagram shows the market situation

Question: The following diagram shows the market situation for the perfectly competitive market for wheat. The wheat market is currently at short-run equilibrium E, where the price P* is not high enough to generate posit ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved