Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo
Principles of Microeconomics 2e

Key Terms

Principles of Microeconomics 2eKey Terms

adverse selection
when groups with inherently higher risks than the average person seek out insurance, thus straining the insurance system
asymmetric information
a situation where the seller or the buyer has more information than the other regarding the quality of the item for sale
coinsurance
when an insurance policyholder pays a percentage of a loss, and the insurance company pays the remaining cost
collateral
something valuable—often property or equipment—that a lender would have a right to seize and sell if the buyer does not repay the loan
copayment
when an insurance policyholder must pay a small amount for each service, before insurance covers the rest
cosigner
another person or firm who legally pledges to repay some or all of the money on a loan if the original borrower does not
deductible
an amount that the insurance policyholders must pay out of their own pocket before the insurance coverage pays anything
fee-for-service
when medical care providers are paid according to the services they provide
health maintenance organization (HMO)
an organization that provides health care and is paid a fixed amount per person enrolled in the plan—regardless of how many services are provided
imperfect information
a situation where either the buyer or the seller, or both, are uncertain about the qualities of what they are buying and selling
insurance
method of protecting a person from financial loss, whereby policy holders make regular payments to an insurance entity; the insurance firm then remunerates a group member who suffers significant financial damage from an event covered by the policy
money-back guarantee
a promise that the seller will refund the buyer’s money under certain conditions
moral hazard
when people have insurance against a certain event, they are less likely to guard against that event occurring
occupational license
licenses issued by government agencies, which indicate that a worker has completed a certain type of education or passed a certain test
premium
payment made to an insurance company
risk group
a group that shares roughly the same risks of an adverse event occurring
service contract
the buyer pays an extra amount and the seller agrees to fix anything specified in the contract that goes wrong for a set time period
warranty
a promise to fix or replace the good for a certain period of time
Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-microeconomics-2e/pages/1-introduction
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-microeconomics-2e/pages/1-introduction
Citation information

© Jun 15, 2022 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.