Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year. In 2017 health expenditures totaled $500,000 for the insurance company, so the company will set premiums equal to _____ in 2018. Suppose an event occurred in 2018, causing total health expenditures to rise to $800,000. The insurance premiums in 2019 will _____. Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year. a. $6,250; $13,333 b. $13,333; $6,250 c. $500,000; $800,000
Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year. In 2017 health expenditures totaled $500,000 for the insurance company, so the company will set premiums equal to _____ in 2018. Suppose an event occurred in 2018, causing total health expenditures to rise to $800,000. The insurance premiums in 2019 will _____. Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year. a. $6,250; $13,333 b. $13,333; $6,250 c. $500,000; $800,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year.
In 2017 health expenditures totaled $500,000 for the insurance company, so the company will set premiums equal to _____ in 2018. Suppose an event occurred in 2018, causing total health expenditures to rise to $800,000. The insurance premiums in 2019 will _____.
In 2017 health expenditures totaled $500,000 for the insurance company, so the company will set premiums equal to _____ in 2018. Suppose an event occurred in 2018, causing total health expenditures to rise to $800,000. The insurance premiums in 2019 will _____.
Suppose that an insurance company has 100 people in the insurance pool. Suppose further that the insurance company charges premiums based on the average health expenditures from the previous year.
a. $6,250; $13,333
b. $13,333; $6,250
c. $500,000; $800,000
d. $5,000; $8,000
Expert Solution
Step 1
Health insurance is a kind of insurance that covers medical expenses that arise because of an illness. These expenses could be connected to hospitalization costs, the cost of medicines, or doctor consultation fees.
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