Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 4 - Market Failures: Public Goods and Externalities - Appendix - Disscussion Questions - Page 111: 1

Answer

Insurance companies charge based on risk.

Work Step by Step

If more people are more likely to get sick, the insurance company is going to charge them more money to account for this. After all, the more likely the person is to get sick, the more likely they are to cost the insurance company money.
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