A). first blank: having/lacking

second blank: cannot know/know with certainty

third blank: low cost/ high cost

fourth: low cost/high cost

a. Fill in the blanks to outline the logic of the adverse selection problem in the health insurance market. complete information about the health status of individuals, Insurance companies, whether an individual is a high-cost or a low-cost customer. If they charge premiums based on individuals will choose not to purchase insurance. This the expected average cost per customer, some would increase the average cost of providing insurance and force insurance companies to raise premiums. Higher premiums, however, cause still more customers to stop purchasing insurance, so that insurance premiums rise still more. Ultimately, this process may cause the insurance market to collapse. b. Suppose the government wants to mitigate the market failure problem that results from adverse selection in the health-care market. The government could itself act as the primary insurer. require insurance companies to cover all applicants. mandate that all individuals purchase health insurance. c. Private insurance companies also have an interest in finding ways to reduce the problems resulting from adverse selection. Insurance companies could require applicants to undergo physical examinations with a physician of the applicant's choice. offer different types of plans, e.g., one with a high deductible and a low premium and one with a low deductible and a high premium. Davoid covering people with preexisting conditions