ECON 2000 Midterm Exam

In the U.S., private health insurance companies

can be either for-profit or not for-profit firms

When a negative externality exists, the private market produces

more than the economically efficient output level

When there are few substitutes available for a good, demand tends to be

relatively inelastic

Of the following high-income countries, which has the lowest life expectancy at birth?

the US

of the following high-income countries, which has the lowest mortality ratio for cancer?

the US

which of the following goods would have the most inelastic demand

bread

A point under the PPF is

inefficient in that not all resources are being used

Health care makes up ________ of the U.S. economy

more than one-sixth

This statement best describes the concept of consumer surplus

"I was all ready to pay $300 for a new leather jacket that I had seen in Macy's, but I ended up paying only $180 for the same jacket

The US Bureau of Labor Statistics forecasts that ___________ fastest-growing occupations over the next 10 years will be in health care

13 of the 20

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better that the company that he is more likely to make a claim on a policy. What is the term used to describe the situation above>

Adverse selection

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

An "increase in supply" means that the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price

Which of the following would definitely cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

An increase in supply and an increase in demand greater than the increase in supply

How do you describe equilibrium in a market?

At equilibrium quantity demand equals quantity supplied

True of False: if a country produces only two goods, then it is not possible to have an absolute advantage in the production of both goods

False

True or false: The basis for trade is absolute advantage, not comparative advantage

False

The provision of the Patient Protection and Affordable Care Act (ACA0 which states that, with limited exceptions, every resident of the US must have health insurance that meets certain basic requirements is the ________________ provision

Individual mandate

True of False: Is it possible to have an absolute advantage in producing a good or service without having a comparative advantage

True

An externality is

a benefit or cost experienced by someone who is not a producer or consumer of a good or service

The health care system in Canada is referred to as a ________, and is a system in which the government provides national health insurance to all Canadian residents

a single-payer heath care system

The health care system in Japan is referred to as a __________, under which every resident of Japan is required to enroll in either a private, or the government provided, health insurance programs

a universal health insurance system

The area ______ the market supply curve and ______ the market price is equal to the total amount of producer surplus in a market

above, below

In 2016, ______________ of the uninsured were younger than age 35.

almost 85 percent

A key difficulty facing insurance companies is the people know more about their health than doe insurance companies, What is the phenomenon called?

asymmetric information

A situation in which a country does not trade with other countries is called

autarky

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

consumer surplus

Each point on a _______ curve shows the willingness of consumers to purchase a product at different prices

demand

which of the following statements about the price elasticity of demand is correct?

demand is more elastic in the long run than it is in the short run

The provision of the Patient Protection and Affordable Care Act (ACA) which states that every firm with more than 200 full-time employees must offer health insurance to its employees and must automatically enroll them in the plan is the ________ provision.

employer mandate

Health insurance plans which typically reimburse doctors and hospitals with payment for each service they provide are known as

fee-for-service plans

Over the past 165 years in the United States, life expectancy

has more than doubled

Adverse selection occurs in the market for used cars because used car buyers

have less information than used car sellers

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

health maintenance organizations

Price elasticity of demand measures

how responsive quantity demanded it to a change in price

The PPF shows that

if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

Because of the positive externality of vaccinations, economic efficiency would be improved

if more people were vaccinated

A tariff is a tax imposed by a government on

imports

Goods and services bought domestically but produced in other countries are referred to as

imports

A supply schedule

is a table that shows the relationship between the price of a product and the quantity of the product supplied

This creates a negative externality

keeping a junked car parked on your front lawn

The demand for all carbonated beverages is likely to be ________ the demand for Dr. Pepper

less elastic than

if demand is inelastic, the absolute value of the price elasticity of demand is

less than one

If the PPF is _________, then the opportunity cost are constant as more of one good is produces

linear

The PPF shows that ___________ combinations of two products that can be produced in a particular time period with available resources.

maximum attainable

The slope of the PPF

measures the opportunity cost of producing one more unit of a good

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of

moral hazard

This creates a positive externality

planting trees along a sidewalk which add beauty and create shade

Total revenue equals

price per unit times quantity sold

In the United States, doctors and hospitals that provide most health care are

primarily private firms

In the US, health care spending per person is _________________ the average for most other countries, even taking into account the effects of higher income per person

significantly higher than

The health care system in the UK is referred to as a ___________, under which the government owns most of the hospitals and employs most of the doctors

socialized medicine

A ________ curve shows the marginal cost of producing one more unit of a good or service

supply

A point on the PPF line is

technically efficient

Most doctors and hospitals operate as private businesses in all of the following countries except

the UK

The largest government run health care system in the world, with 1.4 employees, is in

the UK

Of the following high income countries, which has the highest infant mortality rate?

the US

The concept of opportunity cost it that

the economic cost of using a factor of production is the alternative use of that factor that is given up.

when demand is elastic, a fall in price causes total revenue to rise because

the increase in quantity sold is large enough to offset the lower price

In a competitive market equilibrium

the marginal benefit equals the marginal cost of the last unit sold

A positive externality causes

the marginal social benefit to exceed the marginal private cost at the market equilibrium

A negative externality exists if

the marginal social cost of producing a good or service exceeds the private cost

when demand is unit-elastic, a change in price causes total revenue to stay the same because

the percentage change in quantity demanded exactly offsets the percentage change in price

If a doctor knows that an insurance company will pay for most of a patient's bill, the doctor has more of an incentive to required additional medical procedures and tests, even if the patient may not require them. This is an example of

the principle-agent problem

At a products equilibrium price

the product's demand curve crosses the products supply curve

In the US in 2016, a majority of people received health care through

their employers

if the market for a product is broadly defined, then

there are few substitutes for the product and the demand for the product is relatively inelastic

A point above the PPF line is

unattainable with current resources

if demand is perfectly inelastic, the absolute value of the price elasticity of demand is

zero