Economics Homework Help

Please review the slides before writing the answers. As much as possible, please use your own language. (and if you borrow language from the slides, please provide the reference. )

Answer the following questions:

1. (a) In the context of social insurance, explain what is meant by adverse selection. (2 points)

(b) What are some concrete ways in which the government could potentially address adverse selection in an insurance market? (3 points)

2. (a) What is self-insurance? In the context of unemployment insurance as the social insurance, explain how the availability of self-insurance determines the efficacy of social insurance. (6 points)

(b) The relative importance of self-insurance versus social insurance programs for the consumption smoothing of an individual depends on two factors. Explain both in your own words. (4 points)

3. (a) The employer-provided health insurance system is very attractive to both the insurance providers (supply side) and the insured party (demand side). Clearly describe and explain one supply-side reason and one demand-side reason for this rise in popularity. (4 points)

(b) Discuss the three-legged-stool approach of Massachusetts’ experiment with incremental universalism. (3 points)

(c) What were some of the consequences or impacts of this three-legged-stool implementation in the state? (3 points)

4. (a) Explain what is meant by agglomeration economies, and then describe three potential channels of such economies taking place. (2 + 3 = 5 points)

(b) Following the discussion in Austin et al. (2018), what were some barriers in 21st century America that could have contributed to the decline in migration rates in the country. (5 points)

5. (a) Explain two potential externalities from a geographic area exhibiting lower rates of not working. (2 points)

(b) Explain both the demand-side and the supply-side factors that have led to the increasing and persistent non-employment rates in the U.S. (3 points)

Additional Notes:

• Length of answers – is completely up to you but the questions need to answered as completely as possible. Longer answers will never be penalized!
• Please number your answers according to the numbering of the questions provided above.