Tim Wocsom needed surgery but he is uninsured so he does not avail of it (cost: $2,000) as long as he can withstand the pain. When he got insurance, his copay dropped to $400 so now he can afford and did the surgery and now his pain is gone.

According to the Classical or conventional theory, the social cost is ___________:

According to the John Nyman theory, the social cost is ___________;

Group of answer choices

$800; zero

zero; $800

$800; $800

$1,600; zero

$1,000; zero

Assume Leonel and Cristiano have identical insurance. The only difference is that Leonel has an office visit copay of $25 while Cristiano's office visit copay is $40. Whose policy provides greater social loss? Whose policy provides greater moral hazard?

Group of answer choices

Cristiano's; Leonel's

Leonel's; Leonel's

Cristiano's; Cristiano's

Leonel's; Cristiano's

none of the choices