Micro Economics

Chapter: 8 readingReading 8.1

Production costs and the Theory of the firm

Please answer the questions from the mentioned chapter.

1. Using economic analysis, discuss how medical savings accounts (MSAs) reduce one component of a firm's costs -- providing fringe benefits through health insurance coverage? Relate this as well to the discussion of moral hazard and adverse selection

2. Do you have an MSA? If so, has this changed your behavior toward healthcare spending? Why or why not?