Set their price according to their pessimistic expectations

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Reference no: EM131071598

Figure 14.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. If the insurance companies are pessimistic and set their price according to their pessimistic expectations:

a. the market will include only low-cost customers.

b. the companies' pessimism is not justified.

c. the market will include some low-cost and some high-cost customers.

d. the market will include only high-cost customers.

Reference no: EM131071598

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