Macroeconomics Exam 2
An increase in the expected future price
shifts the supply curve to the left
An increase in productivity
shifts the supply curve to the right
An increase in the price of a complement
shifts the supply curve to the right
About ___ of pharmaceutical patents are issued to U.S. firms
2/3
Patient Protection and Affordable Care Act
2010 legislation aimed at reducing the number of uninsured individuals and decreasing health care costs
Supply curve
A curve that shows the relationship between the price of a product and the quantity of the product supplied.
Moral hazard
Actions people take after they have entered into a transaction that make the other party to the transaction worse off (HAPPENS AFTER)
Market-based reforms
Changes in the market for healthcare that would make it more like the markets for other goods and services.
Interior good
Demand increases as income falls and decreases as income rises
Normal Good
Demand increases as income rises and decreases as income falls
True or False: If consumers believe the price of tablet computers will increase in the future this will cause the demand for tablet computers to decrease now
F
True or False: A doctor pursuing the interest of his patients rather than his own interests is an example of principal-agent problem
F
True or False: A majority of people in the U.S. do NOT have private health insurance
F
True or False: A positive technological change will cause the quantity of a good supplied to increase
F
True or False: Adverse selection is a situation in which one party to an economic transaction has less info than the other party
F
True or False: An increase in quantity supplied is represented by a rightward shift of the supply curve
F
True or False: College education tends to result in a positive externality because the recipient receives the full benefit of the education
F
True or False: In a market with positive externalities, the market equilibrium price will be greater than the efficient equilibrium price
F
True or False: Japan has a single-payer health care system in which the gov. provides national health insurance to all Japanese residents
F
True or False: Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.
F
True or False: The income effect explains why there is usually a direct relationship between the price of product in the quantity of the product demanded
F
True or False: vaccinations tend to result in a negative externality
F
True or False:A decrease in Supply is caused by a decrease in the price of the product
F
True or False:A decrease in the number of firms in a market will cause Supply to increase
F
True or False:Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off
F
True or False:An inferior good is a good for which the quantity demand increases as the price decreases holding everything else constant
F
True or False:If the price of a product is expected to increase in the future the supply today will increase
F
True or False:If the price of peaches a substitute for plums increases the demand for plums will decrease
F
True or False:The income effect of a price range refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product
F
True or false: On avg, people in the U.S. spend a smaller percentage of their income on health care than do people in most other countries
F
Complements
Goods and services that are used together
Substitutes
Goods and services that can be used for the same purpose.
A decrease in current price
No shift
Asymmetric information
One party has less information than the other
An increase in the price of a substitute good
Shifts demand curve to the right
An increase in the price of a complimentary good
Shifts the demand curve to the left
An increase in income (good is inferior)
Shifts the demand curve to the right
An increase in income (good is normal)
Shifts the demand curve to the right
An increase in population
Shifts the demand curve to the right
An increase in taste of a good
Shifts the demand curve to the right
An increase in the expected price in the future
Shifts the demand curve to the right
An increase in the number of firms in the market
Shifts the supply curve to the right because additional firms result in a greater quantity supplied at every price
True or False: A decrease in the price of inputs will cause the supply curve for a product to shift to the right
T
True or False: A normal good is a good for which the demanded decreases as income decreases, holding everything else constant.
T
True or False: Although most large firms in the U.S. offer their employees health insurance, fewer than 2/3 accept it
T
True or False: An increase in population results in an increase in demand
T
True or False: Insurance companies use deductibles and coinsurance to reduce moral hazard
T
True or False: One consequence of adverse selection in the market for used cars is that most used cars sold will be lemons
T
True or False: The U.K. has a health care system under which the gov. owns most of the hospitals and employs most of the doctors
T
True or False: Under current U.S. tax laws, individuals do NOT pay taxes on health insurance benefits they receive from their employers
T
True or False:A change in quantity supplied is represented by a movement along the supply curve
T
True or False:All else equal, as the price of a product Falls the quantity supplied decreases
T
True or False:The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction is known as adverse selection
T
True or False:The substitution effect explains why there is an inverse relationship between the price of a product in the quantity of the product demanded
T
True or False:in a market with positive externalities, the market equilibrium quantity will be less than the efficient equilibrium quantity
T
Ceteris paribus (all else equal)
When analyzing relationship between 2 things, like price and quantity demanded, other variable must be constant.
Health insurance
a contract under which a buyer agrees to make payments, or premiums, in exchange for the provider's agreeing to pay some or all of the buyer's medical bills
Demand curve
a graph of the relationship between the price of a good and the quantity demanded
Socialized medicine
a health care system under which the government owns most of the hospitals and employs most of the doctors. (the UK)
Decrease in supply
a leftward shift of the supply curve
Competitve market equilibrium
a market equilibrium with many buyers and sellers
Principal-agent problem
a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him
Increase in supply
a rightward shift of the supply curve
Market equilibrium
a situation in which quantity demanded equals quantity supplied
Universal health insurance
a system by which the government provides health insurance to all citizens, thereby controlling health insurance at the federal level (Japan)
Single-payer health care system
a system, such as the one in Canada, where the government provides health insurance to all of the country's residents
Product equilibrium
any buyer willing to pay price will find seller
Law of demand
consumers will buy more of a good when its price is lower and less when its price is higher
Fee-for-service
doctors and hospitals receive a payment for each service they provide
An increase in the price of a substitute
shifts the supply curve left
Law of Supply
producers offer more of a good as its price increases and less as its price falls
Shortage
quantity demanded is greater than quantity supplied
Surplus
quantity supplied is greater than quantity demanded
An increase in the price of an input
supply curve shifts left
Quantity demanded
the amount of a good that buyers are willing and able to purchase
Market demand
the demand by all the consumers of a given good or service
Adverse selection
the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction (HAPPENS DURING)