ECON 4100 MIDTERM, L Huckins
Suppose the demand for Digital Video Recorders (DVRs) is given by Q = 250 - .25p + 4pc, where Q is the quantity of DVRs demanded (in 1000s), p is the price of a DVR, and pc is the price of cable television. How much does Q change if the price of cable changes slightly (i.e. the partial derivative of demand with respect to pc)? A) 125 B) 4.25 C) 4 D) .25
C) 4
The above figure shows three different supply-and-demand graphs. Which graph best represents the market for workers at your nearest fast-food restaurant? A) Graph A B) Graph B C) Graph C D) None of the above.
C) Graph C
Restricting imports tends to A) shift the demand curve for the product to the left. B) shift the demand curve for the product to the right. C) change the shape of the supply curve. D) increase the quantity supplied of a product.
C) change the shape of the supply curve.
The expression "increase in quantity supplied" is illustrated graphically as a A) leftward shift in the supply curve. B) rightward shift in the supply curve. C) movement up along the supply curve. D) movement down along the supply curve.
C) movement up along the supply curve.
If the price of automobiles were to decrease substantially, the demand curve for automobiles would most likely A) shift rightward. B) shift leftward. C) remain unchanged. D) become steeper.
C) remain unchanged.
According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward.
C) slope downward.
Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a(n) A) vertical line where Q = 10. B) vertical line where Q = 100. C) vertical line where Q = 1000. D) horizontal line where Q = 1000.
C) vertical line where Q = 1000.
If the price of automobiles were to decrease substantially, the demand curve for public transportation would most likely A) shift rightward. B) shift leftward. C) remain unchanged. D) remain unchanged while quantity demanded would change.
B) shift leftward.
If the supply curve of a product changes so that sellers are now willing to sell two additional units at any given price, the supply curve will A) shift leftward by two units. B) shift rightward by two units. C) shift vertically up by two units. D) shift vertically down by two units.
B) shift rightward by two units.
Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Pb, where QD is the quantity of pizza demanded, P is the price of a pizza, and Pb is the price of a burrito. What is the slope of this demand function, and what information does the slope provide?
The slope is -2. The slope tells us how a change in the price of pizzas affects the quantity of pizzas demanded. An increase in the price of pizzas by $1 will result in a decrease of the quantity demanded by two pizzas.
Weaken Obamacare's protections for people with pre-existing conditions
States could get waivers that would allow carriers to set premiums based on enrollees' medical backgrounds under several circumstances. Those enrollees would have to have let their coverage lapse, and the state would have to set up a risk program -- such as a high-risk pool -- that, in some cases, could provide help to those being charged higher premiums. States could also seek waivers that would allow insurers to sell plans that don't include all the essential health benefits mandated by the Affordable Care Act. Under Obamacare, carriers must provide outpatient care, emergency services, hospitalization, maternity, mental health and substance abuse, prescription drugs, rehabilitation services, lab work, preventative care and pediatric services. Eliminating these two provisions could lower premiums somewhat and give consumers a wider choice of plans. But it would also make it harder for people to buy comprehensive coverage and weaken the protections for those with pre-existing conditions. The bill would provide $138 billion through 2026 to help states and insurers lower premiums and set up high-risk pools to cover those with pre-existing conditions.
The marketplace (ObamaCare)
Summary: In general, 6 in 10 uninsured Americans can get covered for $100 or less a month under the Affordable Care Act. There is a 6 in 10 chance this applies to you. Nearly 9 in 10 (87%) of those who enrolled in a marketplace account got assistance during 2014 open enrollment. Similar figures were true each year. Thus, again, there is a 9 in 10 chance this applies to you.
Loosen the age-band so insurers can charge older folks more
Under Obamacare, insurers could only charge older enrollees three times more than younger policy holders. The GOP bill would widen that band to five-to-one, which would hike premiums for those in their 50s and early 60s, but reduce them for younger folks. States would also be allowed to seek waivers to allow insurers to charge older consumers even more than five times younger ones.
Theory:
the development and use of a model to test hypotheses, which are predictions about cause and effect
Scarcity:
the situation that arises when people want more than they can get with their limited resources
Microeconomics:
the study of the allocation of scarce resources
Unless you qualify for Medicare,(ObamaCare)
you can use HealthCare.gov or your state's marketplace to sign up and enroll in a plan during each year's open enrollment period. You can use the marketplace to compare plans, apply for cost assistance, and see if you qualify for Medicaid / CHIP.
The American Health Care Act (Trump)
Replaces Obamacare subsidies with refundable tax credits based mainly on age
Market:
an exchange mechanism that allows buyers to trade with sellers
An increase in the demand curve for orange juice would be illustrated as a A) leftward shift of the demand curve. B) rightward shift of the demand curve. C) movement up along the demand curve. D) movement down along the demand curve.
B) rightward shift of the demand curve.
Consider the demand function Qd = 150 - 2P. The effects of other determinants of Qd is reflected in A) the intercept of the function. B) the slope of the function. C) neither the slope nor the intercept of the function. D) in both the slope and the intercept of the function.
A) the intercept of the function.
The above figure shows a graph of the market for pizzas in a large town. If the price price rises from 7 to 8, what is the change in quantity demanded for pizzas? A) -10 B) -30 C) -20 D) 20
A) -10
An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve.
A) a movement up along the demand curve.
An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs.
A) a rightward shift of the demand curve for plasma TVs.
To determine the total demand for all consumers, sum the quantity each consumer demands A) at a given price. B) at all prices and then sum this amount across all consumers. C) Both A and B will generate the same total demand. D) None of the above
A) at a given price.
Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm, where Qs is the quantity supplied, P is price of ice cream, and Pm is the price of milk ($/gallon). If milk price increases by $2 /gallon due to the policy change, how will the Qs change? A) decreases by 20 B) increases by 20 C) decreases by 10 D) increases by 10
A) decreases by 20
The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG, where QD is the quantity of widgets demanded, y is the per capital income and pG is the price of Gizmos. An increase in per capital income will cause A) demand shifts left. B) demand shifts right. C) demand increases. D) movement along the demand curve.
A) demand shifts left.
Suppose the demand for Digital Video Recorders (DVRs) is given by Q = 250 - .25p + 4pc, where Q is the quantity of DVRs demanded (in 1000s), p is the price of a DVR, and pc is the price of cable television. How much does the quantity demanded for DVRs change if the p rises by $40? A) drops by 10,000 DVRs B) increases by 16,000 DVRs C) drops by 2,500 DVRs D) increases by 4,000 DVRs Answer:
A) drops by 10,000 DVRs
The market supply curve is found by A) horizontally summing all individual supply curves. B) vertically summing all individual supply curves. C) Either A or B above since they both give the same answer. D) None of the above.
A) horizontally summing all individual supply curves.
If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely A) shift leftward. B) shift rightward. C) become flatter. D) become steeper.
A) shift leftward.
A rise in the oil price will A) shift the supply curve of gas to the left. B) shift the supply curve of gas to the right. C) leave the supply curve of gas unchanged. D) not enough information.
A) shift the supply curve of gas to the left.
Suppose the demand for widgets is given by QD = 100 - 5p - pd + 2I, where I is average consumer income, p is the price of lemons, and pd is the price of doodads. According to this equation, doodads are a(n) ________ for widgets. A) substitute B) complement C) input D) None of the above.
A) substitute
The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y, where Qd is the quantity demanded, P is the price, Pb is the price of buritos, Ps is the price of soft drinks sold in the pizza restaurants, and Y is personal income per month (in thousand dollars). We can conclude that burritos and pizzas are A) substitutes. B) normal goods. C) complements. D) unrelated.
A) substitutes
The demand curve for Widgets is given by QD = 6000 - 2y - 200p + 30pG, where QD is the quantity of widgets demanded, y is the per capital income and pG is the price of Gizmos. Compute the partial derivatives with respect to y and pG.
Answer: -2 and +30 respectively
The quantity of a good that consumers demand depends only on the price of the good. True False
Answer: False. The quantity of a good demanded depends on many factors including: price, consumers' incomes, and the price of related goods.
The marketplace (ObamaCare)
As the law stands now, the "employer mandate" says that large employers with over 50 full-time equivalent employees had to cover their full-time workers starting in 2016. Summary: Your employer has to cover you if you work for a larger business. Some employers stepped up to the plate early. Remember, if you have access to employer-based coverage, you can't get cost assistance.
The above figure shows a graph of the market for pizzas in a large town. No pizzas will be supplied unless the price is above A) $0. B) $5. C) $12. D) $14.
B) $5.
Technological innovation in the production of computers has led to A) a decrease in the quantity demanded for computers. B) a rightward shift of the supply curve for computers. C) a decrease in the quantity supplied of computers. D) None of the above.
B) a rightward shift of the supply curve for computers.
Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. This increase in the price of the good results in A) a rightward shift of the supply curve. B) an increase in quantity supplied. C) a leftward shift of the supply curve. D) a downward movement along the supply curve.
B) an increase in quantity supplied.
The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y, where Qd is the quantity demanded, P is the price, Pb is the price of burritos, Ps is the price of soft drinks sold in the pizza restaurants, and Y is personal income per month (in thousand dollars). If there is a $1,000 increase in personal income, how will the Qd change? A) increase by 10 B) decrease by 10 C) unchanged D) not enough information provided
B) decrease by 10
The term "inverse demand curve" refers to A) a demand curve that slopes upward. B) expressing the demand curve in terms of price as a function of quantity. C) the demand for "inverses." D) the difference between quantity demanded and supplied at each price.
B) expressing the demand curve in terms of price as a function of quantity.
Suppose the demand for Digital Video Recorders (DVRs) is given by Q = 250 - .25p + 4pc, where Q is the quantity of DVRs demanded (in 1000s), p is the price of a DVR, and pc is the price of cable television. How much of a change in p must occur for Q to increase by one? A) fall by 25¢ B) fall by $4 C) increase by 25¢ D) fall by $4.25
B) fall by $4
Holding all other factors constant, consumers demand more of a good the A) higher its price. B) lower its price. C) steeper the downward slope of the demand curve. D) steeper the upward slope of the demand curve.
B) lower its price.
The marketplace (ObamaCare)
By using the marketplace, you'll find out if you qualify for cost assistance on your premium or out-of-pocket costs. Cost assistance is based on your income - which must be between 100% and 400% of the Federal Poverty Level (FPL) - and is only available through the marketplace. Out-of-pocket assistance is only offered on Silver plans. If you get cost assistance, you'll need to file form 8962 at tax time. Those with affordable employer coverage can get coverage, but can't get cost assistance. Those with Medicare can't use the marketplace and must go with a Medicare plan. Keep in mind cost assistance is based on annual household income (head of household and spouse's MAGI plus tax dependents AGI for the year you claim assistance), not monthly income.
The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than A) $0. B) $5. C) $12. D) $14.
D) $14.
The demand for pizzas in a large town is written as: Qd = 120 - 10P + 5Pb - 0.5Ps - 10Y, where Qd is the quantity demanded, P is the price, Pb is the price of burittos, Ps is the price of soft drinks sold in the pizza restaurants, and Y is personal income per month (in thousand dollars). What is ∆Q/∆Ps? A) 5 B) -5 C) 0.5 D) -0.5
D) -0.5
Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm, where Qs is the quantity supplied, P is price of ice cream, and Pm is the price of milk ($/gallon). If milk price is held fixed at $4 /gallon, what is the slope of supply function for ice cream? A) -10 B) 10 C) -20 D) 20
D) 20
Consider the demand functions: A) Qd = 250 - 2P B) Qd = 300 - 3P Which of the demand functions reflects a higher level of consumer incomes? A) A B) B C) A and B reflect the same consumer incomes. D) More information is needed.
D) More information is needed.
Supply curves A) slope upward. B) slope downward. C) are horizontal. D) can have many shapes.
D) can have many shapes.
As the price of a good increases, the change in the quantity demanded can be shown by A) shifting the demand curve leftward. B) shifting the demand curve rightward. C) moving down along the same demand curve. D) moving up along the same demand curve.
D) moving up along the same demand curve.
If the demand for oranges is written as Q = 100 - 5p, then the inverse demand function is A) Q = 5p - 100. B) Q = 20 - .2p. C) p = 20 - 5Q. D) p = 20 - .2Q.
D) p = 20 - .2Q.
The Law of Supply insures that supply curves slope upward. True False
False. There is no Law of Supply. Supply curves can take multiple shapes and thus don't have to be upward sloping. (p. 22)
Because people prefer name-brand pain-relieving drugs over store-brand pain-relieving drugs, demand curves do not slope downward for pain-relieving drugs. True False
False. Demand curves slope downward assuming all other factors do not change. Consumers may view brand-name drugs to be of higher quality than store-brand drugs, and therefore the demand curve for brand-name drugs lies to the right of the demand curve for store-brand drugs.
If a good is not produced, then there is no demand for it. True False
False. The demand for a product is independent of its supply. It is possible that people want to buy some of the product, but at prices that are below what sellers would require to begin production.
During the winter of 1997-1998, the northeastern United States experienced warmer than usual conditions. The price of home heating oil was less than it was during the previous winter, but people bought less home heating oil. This contradicts the Law of Demand. True False
False. The statement claiming a contradiction confuses a change in quantity demanded with a change in the demand curve. The law of demand refers to movements along a given demand curve. The mild weather caused a leftward shift of the demand curve.
When the price of beef rises, consumers switch consumption to substitutes such as chicken and fish, thereby decreasing the demand for beef. True False
False. The statement confuses a change in quantity demanded with a shift in demand. When the price rises, consumers find substitute goods to consume, which reduces the quantity demanded, not the demand curve.
Suppose the following information is known about a market: 1. Sellers will not sell at all below a price of $2. 2. At a price of $10, any given seller will sell 10 units. 3. There are 100 identical sellers in the market. Assuming a linear supply curve, use this information to derive the market supply curve.
First, Q = 100q since all firms are identical. This gives two points: (p = 2, Q = 0) and (p = 10, Q = 1000). From the first point, it is known that p = 2 + bQ. When Q = 1000, 10 = 2 + b(1000). Solving for b yields b = .008. Rearranging to solve for Q yields: Q = -250 + 125p or P = 2 + .008Q.
How the Republican bill would change Obamacare
House Republicans have finally passed a bill to repeal and replace Obamacare. After some last-minute changes to the legislation, enough conservatives and moderates were convinced to support the bill. The bill's passage isn't guaranteed, however. Now it heads to the Senate, which is likely to make substantial revisions.
Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?
In all cases, total expenditure equals 100 (since p * Q = 100). In general, a nonlinear demand curve of the form Q = A/p means that consumers wish to spend a total of A on this good regardless of its price.
The American Health Care Act (Trump)
It would erase the coverage gains of the last few years and leave 24 million more people uninsured by 2026 than under Obamacare, according to a Congressional Budget Office analysis of an earlier version of the bill.
The government should spend more money on elementary and secondary education a. True b. False
Neither, this is a normative (should) question whose answer will depend on the values of the person answering the question
The marketplace (ObamaCare)
No matter what plan you get, most basics - like an annual checkup, immunizations, preventive tests, and more - will be covered with no out-of-pocket costs. Regardless of health status, any major medical plan that you want to pay for must be sold to you. You can't be charged more based on gender or health status, and you can't max out annual or lifetime dollar limits on essential care. All plans must offer basic care
Revamp Medicaid funding
The GOP bill would significantly overhaul Medicaid. It would send the states a fixed amount of money per Medicaid enrollee, known as a per-capita cap. States could also opt to receive federal Medicaid funding as a block grant for the adults and children in their program. Under a block grant, states would get a fixed amount of federal funding each year, regardless of how many participants are in the program. Either option would limit federal responsibility, shifting that burden to the states. However, since states don't have the money to make up the difference, they would likely either reduce eligibility, curtail benefits or cut provider payments. The block grant would be more restrictive since the funding level would not adjust for increases in enrollment, which often happens in bad economic times.
The American Health Care Act: WHATS IN AND OUT (TRUMP VS OBAMA)
The GOP's bill would get rid of the Obamacare requirement that people have health coverage or face a tax penalty. It would also eliminate the mandate that employers with at least 50 employees provide health insurance to their workers. Under Obamacare, these companies had to provide affordable insurance to staffers who work more than 30 hours a week. They would face a penalty if they did not meet this criteria and their employee sought subsidies on the exchanges. Instead, the Republican plan seeks to allow insurers to impose a 30% surcharge on the premiums of those who let their coverage lapse for at least 63 days. The plan would enable insurers to levy this surcharge for one year, but it would only apply to policies bought in the individual or small group markets. Under a recent amendment, states that seek waivers could replace this provision with one that allows insurers to charge consumers who've had a gap in coverage based on their health status.
The American Health Care Act (Trump)
The GOP's plan would eliminate the Obamacare subsidies, which are refundable tax credits based on a person's income and cost of coverage in their area. More than eight in 10 enrollees on the Obamacare exchanges receive this assistance, but individuals making more than $47,500 and families of four earning more than $97,200 do not qualify. INSTEAD: the Republicans want to issue refundable tax credits to help people afford coverage on the individual market, but these credits will be based mainly on a person's age.
Eliminate Obamacare taxes
The Republican legislation would eliminate the taxes the law levied on wealthy Americans, insurers, prescription drug makers, device manufacturers and others.
The American Health Care Act: OUT-OF-POCKET(Trump)
The bill would also kill the additional help that individuals earning less than roughly $30,000 a year receive to cover their out-of-pocket costs. More than half of the enrollees on the Obamacare exchanges receive these cost-sharing subsidies.
The American Health Care Act: CREDITS (Trump)
The credits will range from $2,000 for 20-somethings to $4,000 for those in their early 60s. The credits will also have an income cap. Those making more than $75,000 would see their tax credits start to phase out, and an enrollee making more than $215,000 would not be eligible. Families with incomes above $150,000 would see their credits dwindle, while those earning more than $290,000 would not qualify.
Revamp Medicaid funding
The legislation would also end the enhanced match rate for Medicaid expansion for new enrollees starting in 2020. Those already in the program could stay as long as they remain continuously insured. States that have not already expanded would not be allowed to do so, starting immediately. States could also require able-bodied Medicaid recipients to work, participate in job training programs or do community service. The Congressional Budget Office projects that bill would cut the federal government's spending on Medicaid by 25% by 2026 as compared to current law.
Suppose N consumers each have an identical demand curve for a good is given by Q = a - bp, where Q is the quantity demanded, p is the price, and a and b are positive constants. What is the market demand curve? Is the slope (in price) of the market demand greater or less than the slope of each individual demand curve?
The market demand is QM = N ∙ Q = N(a - bp) = Na - Nbp. The slope of the market demand is Nb which is greater (more flat on graph) than the individual demand curve.
Show that the slope of the market demand curve is the summation of the slopes of individuals' demand curves.
The market demand is given by Q = D1(p) + D2(p) + ... + DN(p), where Di(p) is the demand for consumer i and there are N consumers. The addition rule of derivatives implies that the derivative of the market demand is the sum of derivatives of each individual's demand.
The U.S. is planning on imposing quotas on tires imported from china. Domestic retailers predict this will result in an increase in consumer prices on tires by about $10. Use a supply and demand graph with brief explanation to show the effects of an import quota. Assume the quota is binding.
The restriction on imports will shift back the supply curve as less imports will be allowed into the country. This will raise the price and lower the quantity.
Suppose a market is supplied by domestic producers and and an international supply. The domestic (inverse) supply curve is given by the p=5+2Q, and the foreign supply curve is given by p=15. Draw the total supply curve. On a second graph, draw the total supply curve if the government imposes a quota of 10 on foreign supply.
Without a quota, the supply curve will follow the domestic supply curve for Q≤5 and p=15 for Q>5. With the quota, for Q>15 the supply rises with the domestic supply
Open enrollment. (ObamaCare)
You can ONLY purchase qualifying private medical insurance during open enrollment. This is true both inside and outside the marketplace. The only exception is if you've recently had a major life change like moving, getting married, or losing your job. A major life change may qualify you for a special enrollment period in the Health Insurance Marketplace. Summary: Unless you recently had a major life change, you can't Get Private Coverage outside of open enrollment. If you try to buy private insurance outside of open enrollment, chances are you'll end up with a plan that doesn't protect you from the fee. In most cases, you'll just have to wait until next open enrollment unless, of course, you qualify for a special enrollment period.
Model:
a description of the relationship between two or more economic variables
positive statement:
a testable hypothesis about cause and effect
normative statement
a value judgement
The U.S. government imposes a number of import quotas on dairy products, including Swiss cheese. The domestic supply of Swiss cheese is given by: QDom = 250p - 1000 The supply of Swiss cheese from foreign producers to the U.S. (mostly from Switzerland, of course), is given by: QFor = 1125p - 4500 In both equations above, Q is the quantity of cheese (100's of lbs/month), and p is the price per pound. a. Using the equations above, derive the total supply of cheese equation to the U.S. in the absence of any quota. Suppose that fears of neutral countries (like Switzerland) spark the U.S. to restrict imports of Swiss cheese to Q = 9000. b. On a graph, draw (i) the domestic, (ii) foreign and (iii) total supply with the quota.
a. We add the domestic supply and foreign supply by adding the quantities at any price. QTotal = QForeign + QDomestic = 1,375p - 5,500 To find the kink point, first find the price at which the quota restricts the foreign supply: 9,000 = 1,125p - 4,500 So p=12 b. On the graph:
Asking whether an increase in the minimum wage will decrease employment is a. a question of positive economics b. a questions of normative economics c. neither a nor b d. both a and b
a. a question of positive economics
Minimum essential coverage (ObamaCare)
includes all marketplace coverage, most major medical coverage sold outside of the marketplace, Medicare, Medicaid, employer-based coverage, and more. It does not include short-term health insurance. Summary: Ask the folks you Buy Insurance from if your policy counts as "minimum essential coverage." If you are buying private insurance on your own outside of the Health Insurance Marketplace (HealthCare.Gov or your state marketplace), make sure you aren't buying a short-term health policy.
The economy is directed by a bunch of bigwigs on wall street a. True b. False
b. False, A market economy is not really directed. The price system is a decentralized mechanism by which the decisions of millions of consumers and millions of producers are coordinated.
Which of the following is a positive statement? (More than one may be correct) a. intermediate microeconomics should be required of all economics majors to build a solid foundation in economic theory b. when the price of a good goes up, people buy more of it c. when the price of a good goes down, people buy more of it d. Jeffrey Perloff was the first president of the United states
b. when the price of a good goes up, people buy more of it c. when the price of a good goes down, people buy more of it d. Jeffrey Perloff was the first president of the United states
Most economic models assume that all firms maximize their profits all the time. This is obviously not correct, so theories based on these models are not valid.
because the world and the economy are so complex, all models must simplify. Thus, all models are subject to the criticism that their assumptions do not reflect reality. But we cannot throw out all models. if we did we'd have no way of making predictions. Instead we accept the fact that assumptions do not perfectly reflect reality and focus on the ability of a model to predict. If a model makes better predictions than any other model, then it will be accepted as valid (until a better model comes along.) Economists generally use the assumption of profit maximization firms because it has a great track record of making predictions that match the real world.
trade-offs:
measure how much of one thing must be given up to get more of another thing
Prices:
measure the trade offs available in the market place and coordinate the independence decisions of consumers and producers
The Affordable Care Act (ObamaCare)
requires you to get and keep major medical insurance (known as minimum essential coverage) throughout the year, pay a fee for each month you go without coverage, or get an exemption. The requirement to buy insurance is sometimes called the "individual mandate," and the fee you have to pay is called the "individual shared responsibility payment." There are over 20 exemptions from the fee, including a short coverage gap of fewer than 3 months everyone qualifies for and an exemption based on income. Some exemptions require you to apply for the marketplace in advance, all exemptions are claimed on form 8965. Summary: You need to Get Health Insurance if you can afford it, or you'll have to pay a tax for every month you go without coverage or an exemption.