Individuals with an Expensive Pre-Existing Condition Are More Likely to Purchase

Multiple Choice

Individuals with an expensive pre-existing condition are more likely to purchase health insurance, which exemplifies _____. Individuals who have health insurance visit the doctor more frequently than individuals who are uninsured, which exemplifies _____.

A) moral hazard; adverse selection
B) adverse selection; moral hazard
C) statistical discrimination; adverse selection
D) adverse selection; the principal-agent problem