CHAPTER 9: COMPARATIVE ADVANTAGE IN INTERNATIONAL TRADE, Exam 2 Microeconomics

Which of the following is one of the difficulties in making​ cross-country comparisons in health care​ outcomes

. Countries may have different lifestyle choices that affect health care outcomes apart from the effectiveness of the​ countries' health care system. B. Countries do not deliver health care services in the same way. C. Countries do not always collect health care related data in the same way.

Which of the following accurately describe changes over time in the health of the average person in the United States

1) Life expectancy at birth has increased 2) The likelihood of death in the first months of life has fallen 3) Mortality rates have decreased. 4) Obesity has increased.

In which of the following ways is the market for health care in the United States similar to the markets for other goods and​ services?

1) health care sellers are primarily private firms 2) consumers of health care make the decisions about how much they wish to consume

improve health care by

1) improving food distribution 2) improving sanitary conditions 3) accelerating medical research

Which of the following are among its major​ provisions?

1) requires every firm with more than 200 employees to offer health insurance 2) Expands eligibility for medicare and establishes an advisory board with the power to reduce Medicare payments if needed 3) increases taxes on workers with incomes above $200,000

Quota

A numerical limit on the quantity of a good that can be imported.

Is free trade LOADING... more likely to benefit a​ large, populous country or a small country with fewer​ people?

A small country with fewer people

In the real​ world, specialization is not complete. Why do countries not completely​ specialize?

A. Because production of most goods involves increasing opportunity costs. B. Because tastes for products differ. C. Because not all goods are traded internationally. D. All of the above. D - ALL OF THE ABOVE

Criticisms of the ACA made by economists and policymakers favoring​ market-based reforms​ include: ​

A. Costs will not be reduced nor will efficiency improve because ACA fails to inject sufficient competition into the health care market. B. The ACA makes the market for health care less like the markets for other goods and services. C. Under​ ACA, inaccurate signals will continue to be received by both consumers and suppliers.

Which of the following is not a​ non-tariff barrier to​ trade?

A. Health and safety requirements B. Ad valorem tax on imports Your answer is correct.C. Embargos D. Quotas E. National security grounds B

Which of the following statements is true about the health of people in the United States during the past 150​ years?

A. Infant mortality has decreased. B. The average person has become taller. C. Life expectancy has more than doubled

Which of the following factors explain the other 90 percent of the​ increase?

A. Low rates of productivity in the health care sector. B. The introduction of higher cost drugs and medical equipment. C. Excessive​ paperwork, duplication, and waste. D. Malpractice​ lawsuits, including the costs of unnecessary tests and procedures.

Why do some people oppose the World Trade Organization​ (WTO)?

A. Some opponents are specifically against the globalization process that began in the 1980s and became widespread in the 1990s. B. Some opponents desire to erect trade barriers to protect domestic firms from foreign competition. C. Some critics of the WTO support globalization in principle but believe that the WTO favors the interests of the​ high-income countries at the expense of the​ low-income countries. D. All of the above.

Political commentator B.​ Bruce-Biggs once wrote the following in the Wall Street​ Journal: ​"This is not to say that the case for international free trade LOADING... is​ invalid; it is just irrelevant. It is an​ 'if only everybody. . .​ .' argument. . . . In the real world almost everybody sees benefits in economic​ nationalism." Choose the correct answer that might refer to​ "economic nationalism."

A. The use of quotas to protect domestic industries. B. The use of tariffs to protect domestic industries. C. The use of​ non-tariff barriers to protect domestic industries. D. All of the above. D

In attempting to compare health care outcomes across​ countries, a problem encountered is

A. a lack of data consistency. B. distinguishing health care effectiveness from lifestyle choices. C. getting an accurate measurement of health care delivery. D. properly assessing consumer preferences

Which of the following is one of the major reasons for the improvement in U.S. health in the last two​ centuries?

A. advances in medical equipment and prescription drugs B. better sanitation C. improvements in the distribution of food

By shifting the costs of Medicare to​ beneficiaries, the growth of Medicare spending may be restrained since

A. health care consumers will become more knowledable about the effectiveness and value of health care services. B. beneficiaries will be more prudent when it comes to choosing which health care services to acquire. C. consumers will demand fewer health care services than they would if a third party pays most of the bill.

Some objections raised by economists to​ Fogel's analysis of the drivers behind increases in spending on health care cite its

A. lack of attention to​ short-run financing considerations. B. failure to adequately assess the role of distorted price signals for buyers of health care. C. ​de-emphasis of cost​ factors, particularly those related to technological change.

expansion of the economy

An expansion of the​ economy's productive capacity is represented graphically as an outward shift in the production possibilities frontier. Much like a technological​ advance, the public health movement in the United States in the late nineteenth and early twentieth centuries increased the​ country's productive​ capacity, doing so by increasing the size and effectiveness of the​ country's labor force.

efficient quantity of medical services is

At the efficient level the marginal benefit to consumers from medical services would equal the marginal cost of producing the services and the equilibrium quantity would be at the efficient level Q1. In this​ equilibrium, the quantity of medical services produced increases to Q2​, which is beyond the efficient level. The marginal cost of producing these additional units is greater than the marginal benefit consumers receive from them.

Which of the following have been offered by economists to explain the rapid increase in health care spending in the United​ States? ​

B. The development of advanced medical technology and new prescription drugs. C. A slow rate of growth of labor productivity in health care. D. Distorted economic incentives for consumers and suppliers of health care. E. An aging U.S. population.

Criticisms of the ACA made by economists and policymakers who believe that the federal government should have a larger role in the health care system include all of the following

B. the reforms​ don't go far enough in emulating the Canadian and European health care systems. C. information problems and externalities in the market for health care will continue under ACA. D. the system under ACA will have administrative costs higher than if government involvement was greater.

Compared with those of other​ high-income countries, health care outcomes in the United States are

Compared with those of other​ high-income countries, health care outcomes in the United States are superior in some cases​ (e.g., mortality ratio for​ cancer, access to MRI units and CT​ scanners) and inferior in others​ (e.g., infant mortality and​ obesity).

Dumping LOADING... is selling a product below its cost of production. Who benefits and who loses from​ dumping? What problems arise when implementing​ anti-dumping laws?

Consumers benefit while competing firmsCo ​ lose; The true production costs are not easy for foreign governments to calculate.

As long as countries only produce goods in which they have a comparative advantage and trade those goods for ones in which they do not have a comparative​ advantage, everyone gains and no one loses as a result of international trade.

FALSE

Countries gain from specializing in producing goods in which they have an absolute advantage and trading for goods in which other countries have an absolute advantage

FALSE

The U.S. economy would experience a gain in economic surplus from the elimination of tariffs and quotas only if other countries also reduced their tariffs and quotas.

FALSE

when an industry receives tariff or quota protection, there is no effect on other domestic industries

FALSE

employer mandate

Firms with more than 50 full minus −time employees must offer health insurance or pay a​ $3,000 fine to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace.

Japan

Has a system of universal health insurance under which every resident is required to either enroll in a​ non-profit health insurance society or in a government health insurance program

Canada

Has a ​single-payer health care system where the government provides national health insurance to all residents.

What is meant by a country specializing in the production of a​ good? Is it typical for countries to be completely​ specialized?

It shifts resources toward producing only those goods where it has a comparative​ advantage; No

Which of the following is an example of positive economic​ analysis?

Measuring the effect of the sugar quota on the U.S. economy.Me

USA

Most people have private health insurance through​ employers, with the government also providing insurance to the​ poor, aged, and military veterans.

Former President Barack Obama once described a trade agreement reached with the government of Colombia as a​ "'win-win' for both our​ countries." Is everyone in both countries likely to win from the​ agreement?

No, workers employed at companies that are less efficient than foreign companies will lose jobs.

The Patient Protection and Affordable Care Act​ (ACA)

The PPACA was enacted in 2010 to significantly reorganize the U.S. health care system.

What insight into the health and​ well-being of the U.S. population might the decline in height​ provide?

The decline in height occurred because improvements in transportation and mobility brought people into greater contact with diseases

UK

The government owns most hospitals and employs most​ doctors, so the health care system is referred to as socialized medicine.

Governments do not currently collect such data because

To justify collecting data on how soon after surgery patients get back to​ work, governments would need a sufficient reason to justify the cost of doing so.

How is the U.S. economy affected by international​ trade?

U.S. consumers buy increasing quantities of goods and services produced in other countries. At the same​ time, U.S. businesses sell increasing quantities of goods and services to consumers in other countries.

US spending on health care

U.S. spending on health care was less than 6 percent of GDP in​ 1965, but had risen to about 17.5 percent in​ 2011, and is projected to rise to about 19.5 percent in 2019.

Which of the following is not a main source of comparative​ advantage?

Which of the following is not a main source of comparative​ advantage? A. Climate and natural resources. B. Technology. C. Relative abundance of labor and capital. D. Internal economies of scale. Your answer is correct.E. External economies of scale. D. INTERNAL ECONOMIES OF SCALE

Should Congress and the president be concerned about the growth of Medicare​ spending?

Yes, since most​ observers/analysts see unrestrained growth in spending as having the potential to undermine the financial health and stability of the government.

health insurance

a contract under which 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

socialized medicine

a health care system under which the government owns most of the hospitals and employes most of the doctors

principal agent problem

a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them

How does the World Trade Organization​ (WTO) allow countries to determine whether dumping has​ occurred?

a product is exported for a lower price than it sells for on the home market.a

Autarky

a situation in which a country does not trade with other countries

asymmetric information

a situation in which one party to an economic transaction has less information than the other party

single player health care system

a system such as the one canada in which the government providers health insurance to all of the country's residents

fee-for-service

a system under which doctors and hospitals receive a payment for each service they provide

Health care in the United States could become an inferior good if

advances in medical technology allow better and less costly treatment of disease and cures for diseases that are now expensive to​ treat, so that expenditures on health care could decline as incomes rise. This is the correct answer.

Rationing decisions

aimed at controlling the distribution of scarce resources

Voluntary Export Restraint (VER)

an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country

what is a voluntary export restraint?

an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country

health care outcome

any indicator of societal health

normal goods

as income per person​ increases, so does health care spending per person.

If the federal government started taxing employees on the value of the​ employer-provided health​ insurance, the value of the​ employer-provided health care benefit would

become less​ valuable, and firms would need to raise wages to compensate for this lost value to keep total compensation the same.

market based reforms

changes in the market for health care that would make it more like the markets for other goods and services

marginal social benefit in represented by which curve?

d2 (positive side)

what is the name given to the sale of a product for a price below its cost of production?

dumping

We might measure the efficiency of a​ country's health care sector by

examining indicators of​ citizens' health and the cost of resources devoted to health care.

If the efficiency of the U.S. health care sector​ improves, it will be likely to employ

fewer​ workers, because the outcomes will be realized with a lower​ cost, or there will be better outcomes for the same cost.

Health Care

goods and services, such as prescription drugs, consultation with doctors and surgeries that are intended to maintain or improve a person's health

In terms of comparisons in health care outcomes across​ countries, the​ economist's observation

has relevance because health care outcomes are affected by many different factors and can be difficult to measure.

patient protection and affordable care act (ACA)

health care reform legislation passed by congress and signed by president barack obama in 2010

Once a country has lost its comparative advantage in producing a​ good, its income will be​ ________ and its economy will be​ ________ efficient if it switches from producing the good to importing it.

higher, more

health care fact 1

improving health care is part of improving living standard

Assume that an improvement in medical technology results in an increase in life expectancy for people 65 years of age and older. This technological advance is likely to

increase expenditures on health care because aging people require increasing levels of health care.

Improvements in the health of the average American caused the U.S. production possibilities frontier to shift out primarily by

increasing the​ country's effective workforce

health care fact 3

it is a normal good

health care fact 2

it is provided like any other goods and services

What is a quota?

limit on the amount of a product entering a country

The success of health care systems of different countries in extending the lives of the very sick

may be measured by examining​ illness/disease mortality ratios

comparative advantage

may change as time passes and circumstances change.

free at the point of​ delivery

means there is no charge to the health care system user.

Compared to other​ countries, the U.S. health care sector is

more efficient in some areas and less efficient in others.

We do not see complete specialization in the real world because

not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ.

What is the term for the payment that a buyer agrees to make in a health insurance contract in exchange for the provider agreeing to pay some or all of the​ buyer's medical​ bills?

premium

financial assistance

premium supports

The ACA

provides tax credits to​ low-income individuals and small businesses with 25 or fewer employees.

While this normative question has no definite correct or incorrect​ answer, it seems reasonable to expect that any health care system​ would, at a minimum and through multiple​ avenues,

reduce human suffering.

projected increases in health care spending as a percentage of GDP (()) be of concern to policymakers

should not

moral hazard

the action people take after they have entered into a transaction tha make the other party to the transaction worse off

Such data ( collection ) can be important in evaluating the effectiveness of a​ country's health care system because

the benefit may be greater than the cost of gathering the data.

Patients with health insurance do not exhibit high price sensitivity to​ providers' costs because

the insurance company often covers the majority of the cost.

All of the following health indicators are less favorable in the United States than in Japan Japan except

the mortality ratio for cancer

If the federal government were to require that employer health care plans have deductibles that were no greater than​ $200 per​ year, the employees in these plans would be better off if

the premiums increased along with the lower deductible.

Globalization

the process by which businesses or other organizations develop international influence or start operating on an international scale.

terms of trade

the ratio at which a country can trade its exports for imports from other countries

The term external economies refers to

the reduction of costs resulting from increases in the size of an industry in a given area.

Which of the following is a source of comparative​ advantage?

the relative abundance of capital and labor

adverse selection

the situation in which one party to a transction takes advantage of knowing more than the other party to the transaction

Protectionism

the use of trade barriers to shield domestic firms from foreign competition.

Which of the following groups is most likely to lose from​ trade?

the workers and companies in the industries that compete with the imports

a health economist observed that​ "it's very hard to measure the things we really care​ about, like quality of life and improvements in​ functioning It is difficult to measure outcomes like these because

there is no one statistic that measures outcomes like these.

decline in death rates in 1981 in US

was due to the change in lifestyle

With​ high-deductible plans, people

will hesitate to go to a doctor to avoid the cost outlay

Is health care actually free to residents of the United​ Kingdom?

​No, because they pay for these services through their taxes.

Which of the following is the way in which the largest number of people obtain health insurance in the United​ States?

​employer-provided insurance plans