Unlike perfectly competitive markets, health insurance and health care markets are characterized by asymmetric information in many forms. To see the consequences, consider the following scenario: The population is evenly divided between 2 types of people: healthy people and unhealthy people. Healthy people have expected health care costs of $1000 per year. Unhealthy people have expected health care costs of $5000 per year. Unhealthy people can become healthy by working out, eating healthier, and taking preventive care. Assume that the cost of becoming healthy in terms of time and effort is $2000 per year. These people live in a city with one employer who will hire anyone who is willing to work. This employer provides complete health care to all its employees; all health care costs are covered by the insurance.
1. Do the unhealthy employees have an incentive to become healthy?
a. Yes.
b. No.
c. Not enough information.
2. What would the new actuarially fair cost of insurance be at the original firm?
3. What is the actuarial fair cost of insurance for all the workers?

Answers

Answer 1

1.  No, unhealthy employees do not have an incentive to become healthy.

2. The new actuarially fair cost of insurance would be $5000 at the original firm.

3. The actuarial fair cost of insurance for all the workers would be $3000

1.

No,  unhealthy employees do not have an incentive to become healthy. This is due to the fact that the only employer in the city is giving jobs to everyone regardless of their health status. Besides, their health care cost is covered and managed by the employer by the insurance. Therefore, unhealthy employees do not have an incentive to become healthy.

2.

The new actuarially fair cost of insurance can be determined by taking the probability of healthy employees and unhealthy employees with their health costs.

However, provided that all healthy people worked for the new employee, it implies that the original firm comprise of only the unhealthy workers and the new actuarially fair cost of insurance can be computed as follows:

Actuarial Fair cost of insurance = Probability ( Healthy employee × cost of health) +  Probability (unhealthy employee × cost of health)

Actuarial Fair cost of insurance = (0 × $1000) + (1 × $5000)

Actuarial Fair cost of insurance = $5000

Therefore, the new actuarially fair cost of insurance would be $5000 at the original firm.

3.

The actuarial fair cost of insurance for all the workers refers to the total sum of required payoffs for both the healthy employees and unhealthy employees

Actuarial Fair cost of insurance = Probability ( Healthy employee × cost of health) +  Probability (unhealthy employee × cost of health)

Actuarial Fair cost of insurance = [tex]\mathbf{(\dfrac{1}{2} \times \$1000) + (\dfrac{1}{2} \times \$5000)}[/tex]

Actuarial Fair cost of insurance = $500 + $2500

Actuarial Fair cost of insurance = $3000

Therefore, the actuarial fair cost of insurance for all the workers would be $3000

Learn more about Actuarial Fair cost of insurance here:

https://brainly.com/question/15970207


Related Questions

Find m2V.


V


W


(2x + 29)


(10x – 27)°


Y

Answers

Answer:

31x

17x

Explanation:

we should add 2x+29

we should subtract 10x and 27

Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafy Greens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafy Greens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost. Refer to Scenario 17-1 . If the restaurant is unable to use tying, what is the profit-maximizing price to charge for a steak

Answers

Based on the information given, it should be noted that the profit-maximizing price will be $20.

From the information given, the willingness to pay Mr. Carnivore will be:

= $20 + $7 = $27

The willingness to pay Ms. Leafy greens will be:

= $8 + $12 = $20

In this case, the profit-maximizing price should be the lower value. Therefore, the price will be $20.

Learn more about profit on:

https://brainly.com/question/1078746

lead a particular function or a subunit within a function. *
General Manager
Functional Manager
Front-Line Manager
ОСЕО

Answers

Answer:

Functional managers are accountable to manage people with specific skills and different resources within a department or section to meet functional objectives as well as corporate objectives. ... Sometimes, both functional managers and project managers have to work together to share resources and experience.

Explanation:function manager

Consider a hypothetical business problem of increased number of incidents and service requests raised by the users that was affecting the turnaround time at their IT help desk. Which tool set combination has the potential to provide the complete end to end solution

Answers

Based on the information given, the set of tools that will be used include kore ai, smart analysis, ikon, dynatrace, and remedy.

From the complete information, smart analytics simply means the process of collecting and analyzing data in order to help businesses make better decisions.

Dynatrace is also important as it provides a softwares platform that's based on artificial intelligence which will help achieve organizational goals.

Learn more about smart analysis on:

https://brainly.com/question/8986181

5 year plan example for high school seniors

Answers

[tex] \huge{ \underline{ \underline{ \mathtt{ \purple{A} \pink{N} \green{S} \blue{W} \red{E} \orange{R}}}}}[/tex]♡

A five year plan is a list of priorities you would like to accomplish over the next several years. As well as actions you can take when you make mistakes, so that you can still meet those goals.

Hope it helps

Find the tax on a home if the assessed value is $24,375 and the tax rate is $43.97 per $1,000

Answers

Answer:

1071.76875

Explanation:

24,375/1000=24.375

24.375x43.97=1071.76875

I dont know a thing about buisness but I like math so I hope this is correct

Rich and Lucy were married for 52 years. Rich died on May 9, 2020. Lucy has no dependents, and she did not remarry. The correct and most favorable filing status for Lucy's 2020 return is: Married filing jointly. Married filing separately. Single. Qualifying widow.

Answers

Based on the year that Rich died and the year that Lucy is filing her taxes, the most favorable filing status is Married filing jointly.

Current tax laws are such that if a person loses a spouse in a certain year and does not remarry in that year, they can file in a joint manner with their now late spouse.

Rich died in 2020 and Lucy did not remarry. Lucy's 2020 returns can therefore be filed as a joint filing with Rich even though he is no longer alive.

In conclusion, the correct answer is option A.

Find out more about joint filing at https://brainly.com/question/2433386.

most of the annual requirements for supplies and services are funded with procurement funds? true or falce

Answers

The statement that most of the annual requirements for supplies and services are funded procurement funds True.

In a project, there will always be annual requirements for supplies and services that is required to achieve the goals as regards the project.

Which means procurement funds, all necessary equipment as well as tools needed for the project would be gotten.

Therefore, to acquire all the annual requirements for supplies and services, procurement funds are needed to achieve this.

Learn more about annual requirements for supplies at:

https://brainly.com/question/13186211

On January 1, 2022, the Sunland Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2022.
Sales units: First quarter 5,700; second quarter 6,840; third quarter 7,980.
Ending raw materials inventory: 40% of the next quarter's production requirements.
Ending finished goods inventory: 25% of the next quarter's expected sales units.
Third-quarter production: 8,330 units.
The ending raw materials and finished goods inventories at December 31, 2021, follow the same percentage relationships to production and sales that occur in 2022. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.
Prepare a direct materials budget by quarters for the 6-month period ended June 30, 2022.

Answers

The preparation of Sunland Company's Direct Materials Budget for the First and Second Quarters ended June 30, 2022 is as follows:

                                    First Quarter  Second Quarter

Ending raw materials        12,654             9,996 (3,332 x 3)

Production requirement  26,505            31,635 (10,545 x 3)

Materials available           39,159              41,631

Beginning inventory        10,602             12,654

Purchases                       28,557             28,977

Cost of purchases     $114,228         $115,908 ($28,977 x $4)

Data and Calculations:

                                   First Quarter  Second Quarter   Third Quarter    Total

Sales units                        5,700                 6,840                   7,980

Ending inventory               1,710                  1,995

Units available for sale    7,410                  8,835

Beginning inventory        1,425                   1,710                    1,995

Production requirement 8,835               10,545                    8,330

Thus, the direct materials budget for Sunland Company is prepared as above.

Learn more: https://brainly.com/question/25693547

You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $42.50; g = 7.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?

Answers

The cost of equity raised by selling new common stock is 11.33%.

Using this formula

re = D1/(P0 × (1 - F)) + g

Where:

re=Cost of equity=?

Dividend(D1)=$1.75

Stock price(P0)=$42.50

Growth rate(g)=7.00%

Floatation cost (F)=5.00%

Let plug in the formula

re =1.75/(42.50 × (1 - 0.05)) + 0.07

re=1.75/(42.50×0.95)+0.07

re=(1.75/40.375)+0.07

re=0.04334365+0.07

re=0.1133×100

re=11.33%

Inconclusion the cost of equity raised by selling new common stock is 11.33%.

Learn more about cost of equity here:https://brainly.com/question/25651592

Identify the function in the organisation you have chosen​

Answers

Answer:

Determination of activities,

Grouping of activities,

Allotment of duties to specified persons,

Delegation of authority,

Defining relationships, and.

The co-ordination of various activities.

If you liquidate $3,000 of your money market mutual fund and transfer the funds to your checking account, then initially, M1 will ________ and M2 will ________. Group of answer choices

Answers

if one liquidate $3,000 of one's mutual fund and transfer them to checking account, then, the M1 will increase and M2 will not increase

Liquidation in this case refers to transfer of mutual fund to one's accessible account for personal use.

Let understand that M1 in money supply includes physical currency, demand deposits, checkable deposits.

M2 in money supply includes cash, checking deposits, easily convertible near money.

In conclusion, if one liquidate $3,000 of one's mutual fund and transfer them to checking account, then, the M1 will increase and M2 will not increase

Read more about MI, M2

brainly.com/question/25458814

You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $8,200 and is expected to run for 7 years; Model B is more expensive, with a price of $13,600, and has an expected life of 9 years. The annual maintenance costs are $760 for Model A and $740 for Model B. Assume that the opportunity cost of capital is 9 percent. Calculate equivalent annual costs (EAC) of each models.

Answers

The equivalent annual costs of each model are as follows:

                                                Model A       Model B

Equivalent annual costs     $2,389.26   $3,008.47

Data and Calculations:

                                              Model A       Model B

Costs of motorcycle              $8,200        $13,600

Expected years of usage      7 years        9 years

Annual maintenance costs    $760          $740

Cost of capital = 9%

Annuity factor                       5.03295        5.99524

PV of annual maintenance  $3,825.04   $4,436.48

Total NPV of costs             $12,025.04  $18,036.48

Equivalent annual costs   $2,389.26  $3,008.47

                          ($12,025.04/5.03295)  ($18,036.48/5.99524)

Thus, the equivalent annual costs of each model are the dividend of the Total NPV costs divided by the Annuity Factor.

Learn more about the equivalent annual costs (EAC) here: https://brainly.com/question/25343720

How much would you need to deposit in an account now in order to have $6000 in the account in 15 years

Answers

Answer:

$400

Explanation:

So we know that is 15 years you will have $6000

so $6000 divided by 15 years.This will bring you how much money you have to deposit each year..

6000/15

400

so..

you will have to deposit $400 every year in 15 years.

hey if u looked on my other post just go to ur notifacations to see
u have to accept the message request

Answers

Okay bc it was a joke I guess thats it is a joke and

Provide some examples of the application of the following from a to f in the hospitality or travel businesses.

a. Volume discounts.


b. Discounts based on time of purchase.

c. Psychological pricing.

d. initiating price increases.

e. buyer reactions to price changes.

f. competitor reactions to price changes.​

Answers

Answer:

weight of discount

disfount on festival offer

Your uncle is offering to sell you his T-shirt printing business for $1M. You think a multiple of 10X earnings (profit) is fair. His earnings are $69,000 per year. Should you buy it?

Answers

No because it is to expensive and the modern outfits are changing relatively quickly

what is the definition of organization ? Briefly explain each part of the definition?​

Answers

organization isn a group or team that works together to accomplish a task

A surplus of 500 units will occur when the price is rev: 05_07_2018 Multiple Choice $30 per unit. $20 per unit. $15 per unit. $10 per unit. g

Answers

Economic surplus simply refers to gains that is benefited by a consumer or producer within an economic activity.

Your information is incomplete. Therefore, an overview of surplus will be given. Economic surplus is also known as the total welfare.

It's simply the extra benefit gotten in a transaction. It's typically the area above the equilibrium price of the good. It's also below the demand curve.

Learn more about surplus on:

https://brainly.com/question/1483399

A hierarchical listing of what must be done in a project is called a: Multiple Choice work breakdown structure (WBS). PERT. planning matrix. crashing plan. critical path.

Answers

A hierarchical listing of what must be done in a project is called: work breakdown structure (WBS).

During the course of a project, a work breakdown structure is compiled that states the various stages in the course of the project. These stages are broken down into manageable bits.

Tasks and subtasks are included so that the engineers know where they are in the course of the project.

Learn more about work breakdown structure here:

https://brainly.com/question/6197566

Below are five items that would be included in the balance of payments for the United States. Sort each item into either the current account or the capital account.

a. a Japanese citizen earns dividend income on shares of stock of a U.S. firm
b. a U.S. citizen buys a vacation home in Acapulco, Mexico
c. a U.S. citizen buys a BMW made in Germany
d. a Japanese citizen donates money to a U.S. charity

Answers

The following items would be in the current account:

a U.S. citizen buys a vacation home in Acapulco, Mexico

c. a U.S. citizen buys a BMW made in Germany

The following items would be in the capital account:

A Japanese citizen earns dividend income on shares of stock of a U.S. firm.

a Japanese citizen donates money to a U.S. charity

The current account records information on  the flow of tangible goods and services in a country.  

Components of the current account

Trade balance - it records import and export.  Net income - it records the income received by a country's residents less the income paid to foreigners. Transfers - it includes income sent to a country by its citizens working in foreign countries.

The capital account is used to record capital transfers and investments.

To learn more  about a current account, please check: brainly.com/question/24029724

True or false?

Brad is not a huge fan of kids but loves to work with animals. The Early Childhood Development pathway of the Human Services cluster would be a good fit for Brad.

Question 15 options:

True


False

Answers

False because it said he wasn’t a big fan of kids

What is the advantage of using agents and brokers when a firm does not have its own sales forces?


Agents and brokers have extensive knowledge of the needs of consumers.


Agents and brokers gather and sort information for online consumers.


Agents and brokers can act as e-intermediaries for internet sales.


Agents and brokers have extensive knowledge of the markets and merchandise.


Agents and brokers encourage syndicated selling.

Answers

The advantage of using agents and brokers when a firm does not have its own sales force is that the agents and brokers have extensive knowledge of the markets and merchandise. Hence, Option D is correct.

Who are the agents and brokers?

Brokers and agents are the people who are used by manufacturers for the possession of their goods in the market. They are the key source for such manufacturers who want to make their products easily available in the market.

The key role of the brokers and the agents is to bring in new buyers or clients for the company. They are hired by the companies as their representatives in front of the buyers.

As the agents and the brokers have a deep knowledge of the local market, it makes it easy for companies who do not have their own sales force to hire agents and brokers to sell their products in the market.

Therefore, Option D: Agents and brokers have extensive knowledge of the markets and merchandise.

Learn more about agent from here:

https://brainly.com/question/14363935

#SPJ2

What is polycentricity?

O A. Independent elements that are separate by bound to each other

O B. Independent elements that are separate

OC. Independent elements that are only nominally separate

O D. The consolidation of independent elements

Answers

Answer:

Definition of polycentric

: having more than one center (as of development or control): such as. a : having several centromeres polycentric chromosomes.

Explanation:

Mark as Brainliest Answer

what you might say about each of the following cabins on this cruise liner: interior cabin, ocean-view cabin, balcony cabin, and suite. Keep in mind you want your description to remain neutral and pique guests interests while still remaining honest.

Answers

The question is about the description of different cabins of cruise liner. Following is the description of each cabin,

Interior cabin : An interior cabin is the area of a cruise which has no window. On this cabin visitors can rest and enjoy the peace. There are luxury and relaxing sofas to relax and comfortable bed to have sound sleep.

Ocean view cabin : An Ocean view cabin is outside cabin which has window to look at the sea. It has luxury couch to sit and enjoy the pleasant view of the ocean.

Balcony Cabin : It is room of a cruise which has separate balcony attached to the room. However the balcony is small in size and there is space of only two chairs but the experience of viewing the ocean from it is unforgettable.

Guest can sit and enjoy their drinks while having beautiful view of ocean waves along with sea breeze.

Suite : This is largest room of the cruise and guests can experience special luxury perks in this room. The suite is a large room of the cruise which has separate lounge and sometimes separate swimming pool too.

Learn more about Business at https://brainly.com/question/16362980

Crane Company estimates that unit sales will be 8,000 in quarter 1, 11,200 in quarter 2, 12,000 in quarter 3, and 14,400 in quarter 4. Using a unit selling price of $68 per unit. Prepare the sales budget by quarters for the year ending December 31, 2022.

Answers

The total sales of the quarter is $2.918,400.

                               Sales Budget (Quarter)

                                        1              2                3                 4

Expected unit sales  8,000        11,200       12,000        14,400

Unit selling price         $68            $68           $68              $68

Total sales                $512,000 $716,800  $768,000  $921,600

Hence, the total sales of the quarter is $2.918,400

Read more about Sales budget

brainly.com/question/25821353

According to the figure, which point(s) would see tax revenues increase if the tax rate decreased?
O a. only c
O b.only B
O c. A and C
O d. B and C
O e. only A

Answers

D. I think sorry if it’s wrong

You are shopping for a new car. You find the perfect vehicle and are now applying for a loan from your local bank. Unfortunately, the bank rejects your application. You are surprised, because you have always paid your bills on time. You decide to examine your credit report. You discover that the credit agency is wrongly reporting that you are delinquent on a credit card bill. You have asked the agency to remove the inaccurate entry, but it has failed to do so. What liability does the credit agency face for its incorrect reporting

Answers

The liability faced by the credit agency for its incorrect reporting of your credit history is C. Your actual damages, plus an additional amount not to exceed $1,000, plus attorney’s fees.

Under the Fair Credit Reporting Act, your damages are not $5,000 only. It is also not actual damages plus or $3,000 plus the attorney's fees.

Thus, you can sue for actual damages, an additional amount not exceeding $1,000, plus your attorney's fees.

Answer Options:

A. $5,0000 only.

B. Your actual damages, plus an additional amount not to exceed $5,000.

C. Your actual damages, plus an additional amount not to exceed $1,000, plus attorney’s fees.

D. $3,000, plus attorney’s fees.

Learn more about suing for damages under the Fair Credit Reporting Act here: https://brainly.com/question/13859282

You are considering employment opportunities after graduation. What would you look for in identifying a prospective employer's company's culture

Answers

Answer:

What would you look for in identifying a prospective employer's company's culture?

Explanation:

benchmarking the company's performance of activities and business processes against "best-in-industry" performers

We would look for the atmosphere, spirit and character that pervades the work climate and the values, business principles, and ethical standards that management preaches and practices in identifying a prospective employer's company's culture.

What do you understand about the company's culture?

A company's culture is how we do what we do in the workplace. It’s the sum of our formal and informal systems and behaviours and values, all of which create an experience for our employees and customers. At its core, company culture is how things get done around the workplace. “How” includes both the formal systems and the informal behaviours.

For example, our company may use instant messaging software to communicate throughout the day, and it may also be okay to yell at a coworker to get your point across. Our systems and behaviours give employees the rules of the road for interacting with the business, and each other.

Company culture is often something we can feel, even as an outsider.

Learn more about culture, here:

https://brainly.com/question/12678729

#SPJ5

IRAC Briefing
CATE v. DOVER
What did the warranty section of the contract provide?
What type of warranty was involved in this case?
What is the issue in the case?
In whose favor did the court rule?

Answers

no se la verdad porque no se inglés si supiera inglés te hubiera ayudado

Other Questions
Isomers are molecules that have the SAME molecular formula, but their atoms are bonded in a different way. Draw the 5 isomers of cyclopentane, C5H10 using Line Structural Diagrams only. The bulb in the circuit shown below does not glow. Which of following labelled parts is responsible for this? the production of wheat increases from 25 tons to 30 tons the percantage increase in prodution of wheat is jackie is saving money for a coat that costs $121 if she already has $61 and saves $15 each week in how many weeks can she buy the coat make a function table According to the self-determination theory, ________ is the need to be involved in close, warm relationships with others. 18x-3y=9 Y=6x-3 what is the answer they have asked you to write an article about digital usage in today's society If is correct answer you will get brainliest.How is the Immigration Act of 1924 different from the Immigration Act of 1882? What is the daughter nucleus of pt-199 after a beta decay?A. At-198B.At-200C.Pt-200D.At-199 Matthew invested $3,000 into two accounts. One account paid 3% interest and the other paid 8% interest. He earned 4% interest on the total investment. How much money did he put in each account? What is the constant of this polynomial? 3x9 + 4x + 129 1) Solve for x (11 - 2*) 7 = 21 What technique does Martin Luther King use to support his argument on the difference between just and unjust laws? how do you write the equation of the line that passes through the points (-9,4) and (7,-2) texas was annexed by the united states in which year? Baron de Montesquieu's Enlightenment ideals influenced which of the following?A Federalism, checks and balances, Declaration of IndependenceB Separation of powers, U.S. Constitution, checkqand balancesC Natural rights, Thomas Jefferson, unalienable rightsD U.S. Constitution, Declaration of Independence, U.S. Bill of Rights Which portion(s) of the brain maintains homeostasis in the muscular system by coordinating skilled movements Find the diameter of a circle whose Circumfrence is 66 m 1. Tam home to Mount Everest. What feature am I?A.Tibetan PlateauB.Great Wall Of ChinaC.Himalayas Mountain RangeD.Maldives Island All of them came to look at Snowball's drawings at least once a day. Even the hens and ducks came, and were at pains not to tread on the chalk marks. Only Napoleon held aloof. He had declared himself against the windmill from the start. One day, however, he arrived unexpectedly to examine the plans. He walked heavily round the shed, looked closely at every detail of the plans and snuffed at them once or twice, then stood for a little while contemplating them out of the corner of his eye; then suddenly he lifted his leg, urinated over the plans, and walked out without uttering a word. "Animal Farm, George Orwell Which statement best suggests a cause of the conflict between Napoleon and Snowball? Napoleon thinks that Snowballs plans are too complicated. Napoleon thinks that Snowball will ruin the farm with technology. Napoleon believes that Snowballs windmill plans will take effort away from producing food. Napoleon wants to control all aspects of the farm and sees Snowballs idea as a threat.