Microeconomics Chapter 7, 14, 22, 24 James Zipperer
Answer the question on the basis of the following information: Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Refer to the given information. The MP of the second barber is:
18 haircuts.
The number of Americans without health insurance (as of 2011) is approximately:
49 million, or about 16 percent of the population.
Approximately what percentage of U.S. health care spending is financed by public insurance?
50 percent.
The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:
8 units of utility.
According to most experts, which of the following factors is most important in causing health care costs to rise?
Fee-for-service health insurance and cost-increasing technology.
The problem of asymmetric information is that:
health care providers are well-informed, but buyers are not.
The two main types of managed care organizations are:
health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
As a percentage of GDP, U.S. health care spending is:
higher than for any other major industrial country.
The availability of health insurance tends to:
increase the quantity of health care demanded and cause an overallocation of resources to the health care industry.
The theory of consumer behavior assumes that consumers attempt to maximize:
total utility.
Answer the question on the basis of the following information: Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Refer to the given information. The MRP of the second barber is:
$108.
Assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:
$36.
If the price of A is $12 and the price of B is $3, the budget line tells us that a consumer in effect can trade:
1 unit of A for 4 of B.
Resource pricing is important because:
1. resource prices are a major determinant of money incomes. 2. resource prices allocate scarce resources among alternative uses. 3. resource prices, along with resource productivity, are important to firms in minimizing their costs.
Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:
Alpha should specialize in Y and Beta in X.
Given the availability of the Medicaid program, why are so many poor people uninsured?
Because many poor people earn enough that they do not qualify for Medicaid.
Which of the following statements best illustrates the concept of derived demand? A. As income goes up, the demand for farm products will increase by a smaller relative amount. B. A decline in the price of margarine will reduce the demand for butter. C. A decline in the demand for shoes will cause the demand for leather to decline. D. When the price of gasoline goes up, the demand for motor oil will decline.
C. A decline in the demand for shoes will cause the demand for leather to decline.
Which of the following statements is correct? A. Both cash and noncash gift-giving cause value losses. B. Neither cash nor noncash gift-giving causes value losses. C.Non cash gift-giving creates a value loss, but cash gifts do not. D. Cash gifts create a value loss, but noncash gifts do not.
C.Non cash gift-giving creates a value loss, but cash gifts do not.
Insurance tends to drive up health care costs by encouraging greater use of health care resources. Why has this occurred in the United States but not in Canada or the United Kingdom?
Canada and the United Kingdom use nonprice rationing to contain costs.
What was the primary goal of the proponents of the Patient Protection and Affordable Care Act?
Extend health insurance coverage to all Americans.
Answer the question on the basis of the following information about the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Refer to the given information. If these two nations specialize based on comparative advantage:
Harmony will produce chicken and Singsong will catch fish.
Which of the following statements is correct? A. If the profit-maximizing rule is fulfilled, it necessarily follows that the cost-minimization rule is being fulfilled. B. The profit-maximizing and the cost-minimizing rules are such that the fulfilling of one has no bearing on the fulfilling of the other. C. If the profit-maximizing rule is fulfilled, the cost-minimization rule may or may not be fulfilled. D. If the cost-minimization rule is fulfilled, it necessarily follows that the profit-maximizing rule is being fulfilled.
If the profit-maximizing rule is fulfilled, it necessarily follows that the cost-minimization rule is being fulfilled.
A profit-maximizing firm employs resources to the point where:
MRP = MRC.
Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that:
Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services.
Employer-provided private health insurance began in the United States because:
during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers.
What do the income effect, the substitution effect, and diminishing marginal utility have in common?
They all help explain the downsloping demand curve.
Suppose you go to a doctor, but your health insurance plan reimburses you for only 80 percent of the bill. This is an example of:
a copayment.
Suppose you go to a doctor but your health insurance plan does not reimburse you because you have not yet paid enough out of pocket for the year to qualify for insurance benefits. This is an example of:
a deductible.
The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:
a nation's trading possibilities line lies to the right of its production possibilities line.
The budget line shows:
all possible combinations of two goods that can be purchased, given money income and the prices of the goods.
Marginal revenue product measures the:
amount by which the extra production of one more worker increases a firm's total revenue.
If MUa/Pa = 100/$35 = MUb/Pb = 300/? = MUc/Pc = 400/?, the prices of products B and C in consumer equilibrium:
are $105 and $140 respectively.
It is generally agreed that in the long run the cost of private health insurance provided by employers is:
at the expense of real wages.
The law of diminishing marginal utility states that:
beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
The MRP curve is the resource demand curve for:
both the purely competitive and imperfectly competitive seller.
A tax subsidy is involved in employer-financed health insurance because:
employer payments for health insurance are not subject to income or payroll taxes.
Marginal utility is the:
change in total utility obtained by consuming one more unit of a good.
An indifference curve shows all:
combinations of two products yielding the same total utility to a consumer.
The theory of consumer behavior assumes that:
consumers behave rationally, attempting to maximize their satisfaction.
In the United States, professional football players earn much higher incomes than professional soccer players. This occurs because:
consumers have a greater demand for football games than for soccer games.
An indifference map implies that:
curves farther from the origin yield higher levels of total utility.
The marginal rate of substitution:
declines as one moves southeast along an indifference curve.
Health care:
is a normal good.
The MRP curve for labor:
is the firm's labor demand curve.
Employer-provided private health insurance:
is unique to the United States and not typically found in other countries.
In the theory of comparative advantage, a good should be produced in that nation where:
its cost is least in terms of alternative goods that might otherwise be produced.
If one worker can pick $30 worth of grapes and two workers together can pick $50 worth of grapes, the:
marginal revenue product of the second worker is $20.
To maximize utility, a consumer should allocate money income so that the:
marginal utility obtained from the last dollar spent on each product is the same.
The law of increasing opportunity costs:
may limit the extent to which a nation specializes in producing a particular product.
Suppose that MUx/Px exceeds MUy/Py. To maximize utility, the consumer who is spending all her money income should buy:
more of X and less of Y.
Between 1960 and 2011, U.S. health care spending as a percentage of domestic output:
more than tripled.
In the real world, specialization is rarely complete because:
nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.
Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is:
negative.
Defensive medicine refers to the idea that:
physicians may require unnecessary testing as a means of protecting themselves against malpractice suits.
Marginal utility can be:
positive, negative, or zero.
The purely competitive employer of resource A will maximize the profits from A by equating the:
price of A with the MRP of A.
Employers will hire more units of a resource if the:
productivity of the resource increases.
The major purpose of Medicare is to:
provide health care services to people on Social Security.
The major objective of Medicaid is to:
provide health care services to those receiving public assistance.
The twin problems of the U.S. health care industry are:
rapidly rising costs and unequal access to health care.
Insurance companies use deductibles and copayments to:
reduce health care costs by discouraging overuse of the health care system.
When economists say that the demand for labor is a derived demand, they mean that it is:
related to the demand for the product or service labor is producing.
The labor demand curve of a purely competitive seller:
slopes downward because of diminishing marginal productivity.
Total utility may be determined by:
summing the marginal utilities of each unit consumed.
A competitive employer should hire additional labor as long as:
the MRP exceeds the wage rate.
Marginal product is:
the amount an additional worker adds to the firm's total output.
The demand for a resource depends primarily on:
the demand for the product or service that it helps produce.
Marginal resource cost is:
the increase in total resource cost associated with the hire of one more unit of the resource.
The change in a firm's total revenue that results from hiring an additional worker is measured by:
the marginal revenue product.
Frank is purchasing products C and D in utility-maximizing amounts. If the price of C is $4 and the price of D is $2, then:
the marginal utility of C is twice that of D.
If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of:
the moral hazard problem.
When the United States is described as having a dual system of health care, this means that:
those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care.
The labor demand curve of a firm:
will shift to the left if the price of the product the labor is producing falls.
Where total utility is at a maximum, marginal utility is:
zero
