Question

In the market for health​ insurance, asymmetric information problems arise because:

Answer 1

Answer:

Option (C) is correct.

Explanation:

Asymmetric information is also known as information failure. When one person or party in a particular economic transaction have larger information or knowledge about the other party then there is a presence of asymmetric information problem.

It is largely present in the market for health insurance because in this type of market the buyer of the health insurance policies have better information about his health as compared to the seller of the health insurance policies. He may hide some of his health issues at the time of signing the policy, hence, there is a problem of asymmetric information arises.