The ACA (aka Obamacare) included an insurance mandate, which forced everyone to purchase insurance or face...

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The ACA (aka Obamacare) included an insurance mandate, which forced everyone to purchase insurance or face a penalty. Question 5.a) Under what conditions would such a mandate improve efficiency (increase total surplus)? What I mean by "under what conditions" is what must the demand, AC, and MC curves look like if the mandate improves efficiency relative to the world before the mandate? To answer this question, it may be useful to draw yourself a diagram in the style of Figure 1 in Einav and Finkelstein "Selection in Insurance Markets: Theory and Empirics in Pictures." Question 5.b) Under what conditions would such a mandate decrease efficiency? (Hint: Play around with the positions of the demand and MC curves to generate these cases.) The ACA (aka Obamacare) included an insurance mandate, which forced everyone to purchase insurance or face a penalty. Question 5.a) Under what conditions would such a mandate improve efficiency (increase total surplus)? What I mean by "under what conditions" is what must the demand, AC, and MC curves look like if the mandate improves efficiency relative to the world before the mandate? To answer this question, it may be useful to draw yourself a diagram in the style of Figure 1 in Einav and Finkelstein "Selection in Insurance Markets: Theory and Empirics in Pictures." Question 5.b) Under what conditions would such a mandate decrease efficiency? (Hint: Play around with the positions of the demand and MC curves to generate these cases.)

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Answer 5a Conditions where the mandate improves efficiency For the mandate to improve efficiency increase total surplus it would be beneficial under c... View the full answer