ECO 161 MIDTERM 11/6/19

Referring to Table 4.2, Box F should be filled with

$10

If a market basket was defined in 2014 and it cost $10,000 to purchase the items in that basket in 2014, while it cost $12,000 to purchase that identical goods in 2015, then the price index for 2015 is

(12000/10000)*100=120

Using Table 6.1, from the 1982-1984 base to 2002, price increased

80.9%

Which of the following can make the unemployment rate fall?

A decrease in the number of people who are looking for work and an increase in the number of people with jobs

A production function begins at the origin because

A firm with no employees will have no output

For a market to be characterized by monopoly, there must be

A single seller

Referring to Figure 4.1, the increase in output from point A to B is less than the increase in output from point B to C because

A smaller number of workers cannot take as good advantage of the division of labor as a larger number

AFC is the same as

ATC-AVC

If order to be relevant, the price floor must be

Above equilibrium

HMO insurance

All of the options are correct

The Children's Health Insurance Program is designed to

Augment Medicaid by insuring the children of working (but low income) families who have no insurance

If the inflation rate turns out to be greater than was is expected to be, the clar losers are

Borrowers

If you want to compare the price of a good through time, you need to

Compare it to how other prices changed using price indexes

Corn and beef prices are typically linked because

Corn is an input to beef

In measuring Gross Domestic Product, goods produced by foreign firms in the United States are

Counted, but goods produced by American firms in foreign firms are not counted

If a person is laid-off from a job and told that they will be brought back as soon as the economy picks up and demand for their product rises, then economists call this person

Cyclically unemployed

With deflation, people will

Delay their purchases of goods in hopes prices will fall further

The primary source(s) of price variability is

Demand and supply variability

In Figure 6.1, which are represents an expansion

E

Medicare is the Federal Government program that provides health insurance to the

Elderly

Very low four-firm concentration ratios characterize the

Furniture industry

Under oligopoly, there are

High barriers to entry

Nations with single payer systems typically have

Higher life expectancies than in the U.S.

The degree to which gasoline and corn prices are linked is dependent on

How high gasoline prices are, because when they are high, corn-based ethanol becomes a more attractive substitute

The majority of people with private health insurance get it

In groups

A single payer system in the United States would

Increase availability of health care services to those who are currently uninsured

Given the production function and total cost function shown in Chapter 4, as production increases, total costs

Increase constantly

One subject of study for macroeconomics is

Inflation

Suppose an apple pie sells at a grocery store for $5. Suppose that the grocery store purchased it from a baking company for $4. Suppose the baking company paid $2 for ingredients, $1 for labor, and made $1 in profit. What is the GDP contribution of the pie?

It is $5

Which of the following was made illegal under the Patient Protection and Affordable Care Act?

Lifetime maximum

If a health economist is worried that a system of health insurance will break down because of the problem of adverse selection, that economist may focus on _________________ as a solution to that problem

Mandation

The firm's supply curve is their

Marginal cost curve about the minimum of AVC

A key assumption about the way firms behave is that they

Maximize profit

The breakfast cereals industry can be best modeled using the model of

Monopolistic Competition

Suppose ten companies begin introducing new genetically engineered apples. Each has their own distinctive taste and brand name. This market would be described by

Monopolistic competition

There are hundreds of companies in the business of providing natural gas to residential users. For the most part, these local gas companies each only serve their local community, so they buy in very competitive markets but sell locally and without competitors. The retail market is therefore likely to be

Monopoly

When neither the patient nor the doctor is cost conscious as a result of health insurance, economists label this the

Moral hazard problem

Being risk averse means that you would be willing to pay _________ than the expected outcome in order to guarantee an outcome

More

The lifetime maximum is the

Most of covered expenses that an insurance company will pay on an individual over their lifetime

A total cost function will

Never slop down

A firm has a branded product is

Not likely to be in perfect competition

Suppose you can fly from Charlotte to London, but only two airlines provide the service. This market would be described by

Oligopoly

In Figure 32.1, at the market price-quantity combination, the consumer surplus is

P*AC

In figure 5.2, a monopolist would charge which price?

P4

Government can support agricultural prices by

Paying farmers not to produce in particular fields

Agricultural Products can be modeled best using the model of

Perfect Competition

Agricultural subsidies are generally

Popular with politicians and unpopular with economists

A price support on agricultural products is labeled by economists as a

Price floor

According to the U.S. Census Bureau, hospitals in the United States are mostly

Private

A graph that maps output against the input required to make that output is called a/an

Production function

If MR>MC, then when an additional unit is sold, the firm's

Profit will increase

The Eau Claire Rule is in place to

Protect dairy farmers outside Wisconsin

According to the U.S. Census Bureau, physicians in the United Kingdom are mostly

Public employees

In figure 5.1, what output would a perfect competitor produce?

Q2

Suppose someone knew that the probability of incurring a $10,000 medical expense was 5% and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to the (4500) with the $500 premium it would cost to get full coverage and decide to buy the insurance but only if the price went no higher than economists would say they are

Risk neutral

In Figure 5.7, assuming perfect competition, at MR4 there will be

Short and long-run pressure on the price to fall

Viewed from the perspective of a U.S. beef farmer, gasoline price variability can be viewed as a source of

Supply variability, because an increase in gasoline costs drive up corn costs and corn is what farmers feed their cattle

The consumer price index is computed by

The Bureau of Labor Statistics

Marginal Cost is

The addition to cost associated with one additional unit of output

Deflation occurs only when

The average price level (CPI) falls

The source of the benefit of the division of labor is

The efficiency that results from workers specializing in one aspect of production

Under perfect competition, the supply curve is

The marginal cost curve, but only the portion that is above the minimum of average variable cost

An indicator of the degree of competition in an industry is the concentration ratio. It measures

The percentage of sales in the industry by the largest firms

Inflation is measured using ____________ in a price index.

The percentage year-to-year increase

Suppose you have a firm in which the owner pays $10,000 per month on rent of the plant and equipment and will pay that regardless of much output they produce. If they get going they need $10 in materials and $20 in labor for each unit they produce,

Their fixed cost are $10,000 and variable cost are $30 per unit

In Figure 4.2, the reason that point A is not through the origin but starts up on the vertical axis is that

There are fixed costs

Cost which increase with an increase in output are called

Variable cost

If an input must be increased for output to increase, it is called a

Variable input