ECON 2010 Lecture Notes - Lecture 22: Patient Protection And Affordable Care Act, Market Failure, Economic Surplus

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: Alexander Hill

Document Summary

Problem with the market that leads to inefficient outcomes. Cars undervalued because of fear of lemons. Three legs of stool: insure the uninsurable (chronically ill), require health insurance (everyone has to pay to help all), subsidize (not everyone can pay) 1/5 of population does not have it. Smoking and not telling insurance co. /latin and professional wording not common/prices) Moral hazard: tendency of imperfectly monitored agent to act undesirably. If the bank fails, you don"t have to worry if you have less than a certain amount (~k)/no more bank runs. People who usually discipline banks, now don"t care (can get money back despite bank going under) Large banks lend money to other banks/everyone needed to take the money in order for smaller banks not be viewed as. Big banks make more risky investments because they know they will be bailed out. Monopoly ex: microsoft in the late 90s and early 2000s (operating system)