Reference no: EM131245617
Question 1.
a) Explain in clear language the economic inefficiency associated with adverse selection.
b) The ACA (aka Obamacare) included an insurance mandate, which forces everyone to purchase insurance or face a penalty. Under what conditions does this mandate improve efficiency (increase total surplus)? What I mean by "under what conditions" is what must the demand,AC, and MC curves look like if the mandate improves efficiency relative to the world before the mandate.Draw a diagram in the style of Figure 1 in Einav and Finkelstein "Selection in Insurance Markets: Theory and Empirics in Pictures" such that the mandate would improve efficiency. For the purposes of this problem, assume there are no externalities--the only benefits are already included in the consumer demand curve and the only costs are already included in the insurer cost curves.
c) The ACA (aka Obamacare) included an insurance mandate, which forces everyone to purchase insurance or face a penalty. Under what conditions does this mandate not improve efficiency (not increase total surplus)? Draw a diagram in the style of Figure 1 in Einav and Finkelstein "Selection in Insurance Markets: Theory and Empirics in Pictures" that corresponds to this case. For the purposes of this problem, assume there are no externalities--the only benefits are already included in the consumer demand curve and the only costs are already included in the insurer cost curves.
Question 2.
a. In panel A, sketch a horizontal line for the competitive equilibrium price (recall the zero profit condition), anda vertical line for the competitive equilibrium quantity. Then indicate the consumer surplus generated at that price.
b. In panel B, sketch a horizontal line for the competitive equilibrium price (recall the zero profit condition), and a vertical linefor the competitive equilibrium quantity. Then indicate the producer surplus generated at that price. Mark areas of negative surplus clearly.
c. In panel C, sketch a horizontal line for the competitive equilibrium price (recall the zero profit condition), and a vertical linefor the competitive equilibrium quantity. Then indicate the total (net) surplus generated at that price.
Question 3.
Sketch a horizontal line for theefficient price (that is, the price that induces an efficient level of quantity), and a vertical linefor the efficient quantity. Then indicate the total (net) surplus at that price.
Question 4.
Sketch a vertical line for the competitive equilibrium quantity. Sketch another vertical line for the efficient quantity. Shade in the area corresponding to the inefficiency (that is, the loss of total surplus) that arises from the competitive equilibrium quantity relative to the efficient quantity.
Question 5.
The ACA created a new requirement that insurers cannot charge copays or deductibles for "annual wellness visits" (aka regular checkups, aka annual physicals). These now cost $0 in (almost) all US insurance plans.
a) Consider only people enrolled both before and after the implementation of the ACA.What does the theory of moral hazard tell is likely to happen to doctor visits among these people? Why?
b) Under what conditions would this policy improve efficiency?
c) Under what conditions would this policy not improve efficiency?
|
Have you attended the symphony
: Have you ever participated in the arts? Are you a musician, an amateur actor? Have you ever studied dance? Painted a picture? How has the work of artists influenced you? Who is your favorite musician? Why? Have you attended the symphony? Have you..
|
|
Determine the er1 that will equate p1 to p12
: Using the estimates of the following range of postmerger PE12 values, determine the ER1 that will equate P1 to P12: - At what PE12 do the two curves intersect? What is the significance of this point of intersection?
|
|
Discuss the potential role of ngos
: http://www.transtutors.com/questions/discuss-the-potential-role-of-ngos-in-relation-to-the-government-and-private-sectors-1906031.htm
|
|
Discuss the components of the original washington consensus
: Discuss the components of the original Washington Consensus. What do you think was most lacking from this framework? What important factors have achieved widespread acceptance in the evolution toward a new consensus?
|
|
Explain in clear language the economic inefficiency
: Explain in clear language the economic inefficiency associated with adverse selection - Consider only people enrolled both before and after the implementation of the ACA. What does the theory of moral hazard tell is likely to happen to doctor visit..
|
|
What is the environmental kuznets curve
: In what cases does it seem implausible? How is climate change expected to impact countries in Latin America, Asia, and Africa? What policies in developed and developing countries may help address these problems?
|
|
Explain why and show mathematically that qmax less then one
: Assuming that λ 1 is a necessary condition for a market for used cars to exist.
|
|
What are private portfolio flows
: To what extent do private portfolio investments in developing countries benefit the recipient countries? What are the potential costs and risks to both investors and recipients? Explain your answer.
|
|
Where do you feel mexico should go in the future
: USA. "Describe what you feel will be one or two key economic and social issues to be debated at the 2016 Presidential elections in the United States - based on your work in this class. What direction do you feel should be taken in the country in o..
|