Question: 1. What does adverse selection mean? How does this type of behavior impose costs on society? Many economists point to moral hazard as the primary

1. What does adverse selection mean? How does this type of behavior impose costs on society? Many economists point to moral hazard as the primary reason underlying rising health care costs in the United States.

2. Explain the general argument behind moral hazard. Explain how an insurer could reduce the scope of the moral hazard problem by introducing a consumer copayment.

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