Question : 21) Automobile insurance companies have a problem with people who : 1267080

Economics

21) Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to

A) asymmetric information.

B) market signaling.

C) moral hazard.

D) adverse selection.

22) If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce

A) the problem of adverse selection.

B) the moral hazard problem.

C) sunk costs.

D) asymmetric information.

23) Health insurance companies impose deductibles on policies and co-payments on claims

A) to increase sales.

B) to reduce moral hazard problems.

C) to reduces sunk costs.

D) to increase prices.

24) In markets with asymmetric information,

A) moral hazard causes adverse selection which in turn causes asymmetric information.

B) adverse selection causes moral hazard which in turn causes asymmetric information.

C) asymmetric information causes moral hazard and then it causes adverse selection.

D) asymmetric information causes adverse selection and then it causes moral hazard.

25) What is the principal-agent problem?

A) It is a problem caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.

B) It is a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them.

C) It is a problem of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat.

D) It is a problem that exists when a person (principal) has more information about the task than the agent he hires to perform the task.

26) In the principal-agent relationship, the agent is

A) the owner of a resource that has hired another party to act on his behalf.

B) the person who is placed in control over resources that are not his own, with a contractual obligation to use these resources in the interests of some other party.

C) the person who is placed in control over resources that are not his own and agrees to compensate the resource owner in the event of outcomes that do not satisfy the resource owner.

D) the person who places his resources in professional hands in exchange for the professional’s promise to act on the resource owner’s behalf.

27) If a doctor knows that an insurance company will pay for most of a patient’s bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. This is an example of

A) moral hazard.

B) the principle-agent problem.

C) asymmetric information.

D) adverse selection.

28) Suppose a large firm allows its employees to choose whether to participate in its health insurance plan. The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible, and Plan II has a high monthly premium but a low deductible. Under which plan is adverse selection likely to be a bigger problem?

A) Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles.

B) Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums.

C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses.

D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect.

29) Vaccinating people against a communicable disease such as influenza not only reduces the chances that the person vaccinated will catch the disease but also reduces the probability that an epidemic of the disease will occur. Which of the following statements is true?

A) Reducing the chances that the person vaccinated will catch the disease is a private cost while reducing the probability of an influenza epidemic is a social benefit.

B) Vaccinating people against communicable diseases yields private benefits in excess of social benefits.

C) Reducing the chances that the person vaccinated will catch the disease is a private benefit while reducing the probability of an influenza epidemic is a social benefit.

D) The benefits of the influenza vaccination outweigh the costs.

30) In the United States, the bulk of health care spending is paid by health insurance companies. Such a system is also called a third-party payer system where consumers of health care pay a nominal fee and the rest are paid by the health insurance provider. Why might such a system lead to an inefficient outcome?

A) Health insurance companies have an incentive to control cost and therefore tend to deny consumers many cutting edge medical treatments.

B) Consumers have an incentive to over-consume health care services because they pay prices well below the cost of providing these services.

C) Physicians concerned that insurance companies may not approve payments tend not to order expensive tests for their patients.

D) Consumers fearing that excessive use of health care services may lead to a rise in insurance premiums tend to under-consume health care services.

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July 1, 2023

Paula Plaintiff's Really Bad Week, Part 1

Introduction

In this assignment, you’ll need to decide whether Paula Plaintiff has any legal claims arising from a series of unfortunate events. After reading the scenario, answer the questions that follow, making sure to fully explain the basis of your decision.

Paula Plaintiff is shopping at her favorite store, Cash Mart. She is looking for a new laptop, but she can’t find one she likes. Then, realizing that she is going to be late for an appointment, she attempts to leave the store, walking very fast. However, before she can leave, she is stopped by a security guard who accuses her of shoplifting. Paula, who has taken nothing, denies any wrong doing. The officer insists and takes Paula to a small room in the back of the store. The guard tells Paula that if she attempts to leave the room she will be arrested and sent to jail. At this point, the guard leaves the room. Paula is scared and waits in the room for over an hour until the manager comes in and apologizes and tells Paula that she is free to go.

About this same time, Geoffrey Golfer is hitting golf balls in his backyard. Geoffrey decides to break out his new driver and hits a golf ball out of his backyard into the Cash Mart parking lot. The golf ball hits Paula Plaintiff on the head and knocks her unconscious just as she is leaving the store.

Instructions

In a 6–10 paragraph paper, answer the following questions:

· What types of legal claims could Paula make against Cash Mart and Geoffrey? Consider the following:

o What are the possible tort claims that Paula can make against Cash Mart? Discuss the elements of the claim and how those elements relate to the facts in the scenario.

o Was Geoffrey negligent when he hit the golf ball that injured Paula? Discuss the elements of negligence and use facts from the scenario to support your decision.

o If Paula files a negligence claim against Geoffrey will she file in civil court or criminal court? Explain the difference between civil court and criminal court.

You will create and submit your assignment by using the ecree link. Just click on the link and start writing. Your work will be saved automatically. You’ll see some feedback on the right-hand side of the screen, including text and videos to help guide you in the writing process. When you’re ready, you can turn in your assignment by clicking Submit at the bottom of the page.

Click the assignment link to start your assignment in ecree. Please note that ecree works best in Firefox and Chrome.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.

In addition to your textbook, you have access to Nexus Uni through the Strayer University Library. Please take advantage of this excellent legal resource!

The specific course learning outcome associated with this assignment is:

· Determine if a plaintiff can make legal claims based on the events in a given scenario.