ECON 113 Midterm 3

Is fee-for-service insurance typically more expensive or less expensive than an HMO covering the same illnesses?

More expensive

Pollution is an example of a

Negative externality

In comparison to perfect competition, monopoly price-quantity combinations generate

a deadweight loss

Suppose there are two countries (country A and country B) each with its own currency (Currency A and Currency B). Suppose the exchange rate is expressed in terms of amount of Currency B needed to get Currency A. A weakening of Currency A would show up as

a decrease in the exchange rate

Economists refer to a monopoly that results from very high fixed costs as

a natural monopoly

The crime of embezzlement is

a nonviolent crime

Triangle area

1/2bh

When was the Children's Health Insurance program created

1990s

If the poverty rate declines because of a general increase in the economic standing of lower income people, the rational criminal model would predict

Decreased crime

The deadweight loss associated with monopoly is

E new equilibrium B where monopoly price intersects with demand curve C old equilibrium

The massive deficit in the US current account primarily reflects the

Excess of US imports over US exports

What area represents the producer surplus under monopoly

F P monopoly B E (area above supply curve, below price line, extending to new equilibrium)

True or false: A person using fee-for-service insurance has many meddlesome bureaucrats than an HMO

False

In the market for a foreign currency, a weakening of the dollar corresponds to a

higher dollar price of foreign currency

In the market for euros, a decrease in the US real interest rate tends to

increase equilibrium price

In the late 2008, the value of the US dollar expressed in British Pounds

increased sharply

The rational criminal model draws a parallel to the thought processes of

investors

If one country determines it wants a fixed exchange rate with another

it must be prepared to purchase or sell its own currency in the market to maintain the desired exchange rate

Natural gas would be considered a

limited natural resource

Monopoly has

low production, high price

rectangle area

lw

Criminal compares cost and benefits associated with crime like investors

marginal cost of hiring an additional officer; marginal benefit of crime reduction

The economic institution behind the connection between abortion and crime rates is based on the idea that

women who choose abortion do not want the child and, if compelled to raise it would be power and do a poorer job at parenting, increasing the likelihood the child would grow up to be a criminal

Can a person using Fee-for-service insurance pick their own doctor

yes

An American company wants to buy a TV from a German company. The German company sells its televisions for 340 euros each. The current exchange rate between the US dollar and the euro is $1=.92 euros. How many dollars will the American company have to convert into euros to pay for the TV

$370

If you have a $2000 covered health expense, a deductible of $500, and a 20% co-pay, then you pay ________ and the insurance company pays ________.

$800; $1200

A rational criminal model assumes

- Criminals commit crimes because they have few legal opportunities - criminals will commit fewer crimes if the likelihood of getting caught rises - criminals will commit fewer crimes if the severity of punishment rises

If the exchange rate of the US dollars for yen is 100 yen to $1, then the exchange rate of yen for US dollars is

.01 (1/100) dollars per yen

Suppose the current British pound to US dollar exchange rate is .86 pounds=$1 US and that the US dollar price of a tablet computer is $280. What is the pound price of a tablet computer? Now suppose the pound to US dollar exchange rate moves to .89 pounds=$1 US. What is the new pound price of a tablet computer?

.86 pounds; $280=240.8 pounds .89 pounds; $280=249.2 pounds Since the pound sterling had depreciated, it costs more to purchase the tablet computer

A physician whose job is to determine if a patient needs to be referred to a specialist is called

A primary care physician

Which of the following countries engages in a fixed exchange rate policy

China

The evidence on most environmental pollutants (lead in the air and water, sulfur in the air, etc.) is that they

Have decreased substantially in the last 40 years

In the market for a foreign currency, a strengthening of the dollar corresponds to a

Lower dollar price of foreign currency

Which of the following environmental problems is among the most-easily solved? A. waste water treatment B. a nation's air pollution issues C. a nation's coastal water pollution issues D. the world's global warming issues

waste water treatment

Amount that the consumer is willing to pay

O A B Q monopoly (rectangle with triangle on top of it)

The area that represents the amount the consumers pay the producer under monopoly is

O (origin) P monopoly B (where p monopoly intersects with demand curve) Q monopoly

The area that represents the total variable cost to producers under perfect competition is

O (origin) F (supply curve price) C (equilibrium) Qpc (quantity perfect competition)

Which of the following is not an example of a crime contemplated by the rational criminal model? A. murder for hire B. Spousal abuse C. Insurance fraud D. car theft

Spousal abuse

In the market for foreign currency, the curve that represents "the willingness of those who have foreign currency to trade them for the U.S. dollar is the

Supply curve

An increase in the expected inflation rate in one country will

weaken its currency

What balances in balance of payment calculations

The financial and current accounts

For a good with no externality, which area on a graph represents the total revenue to the producer

The rectangle made by the P*, the equilibrium point (C), 0 (the origin), and Q*

When tackling local environmental problems, taxes and regulations can be useful. The reason that global problems (like global warming) are more difficult to control is that

There is no ability to enforce those taxes or regulations

Which of the following forms of private insurance is likely to have the lowest premiums and least doctor choice flexibility?

an HMO

The exchange rate between the US dollar and the British pound starts at $1=.5 pounds. IT then changes to $1=.75 pounds. Given this change, we would say that the US dollar has ___ while the British pound has ___

appreciated; depreciated

The estimated costs per crime in the US are

around $1000 when excluding "pain and suffering" cluster and around $15000 including "pain and suffering"

Where is the consumer surplus

below the demand curve and above the price

The hypothesis that suggests that one firm who fears the arrival of competitors is all that is required to experience most of the benefits of perfect competition is the

contestable-markets hypothesis

If the exports are $1.5 trillion, imports are $2 trillion, short-term investment to and from the US exactly balances, and taxes and private payments to and from the US also exactly balance, the current account balance is a

deficit of $.5 trillion

The optimal resource use for a limited natural resource very much depends on the

discount rate you apply to the use to future limited natural resources

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

elderly

Marginal benefit-marginal cost analysis suggests that we spend too much money incarcerating

elderly criminals

The risk-averse person will buy health insurance

even if the expected health costs are less than the insurance premium

A co-payment is

percentage of a covered expense that an individual will have to pay (after the deductible is met)

Publicly provided health insurance for the poor will

raise the price of health care to the non-poor and increase the total amount of health care consumed

In comparison to perfect competition, monopoly

reduces the motivation to innovate

Suppose someone knew 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 them ($500) with the $400 premium it would cost to get full coverage and decided not to buy the insurance, then economists would say they are

risk-loving

The concept of "clean enough" to an economist means the

state of cleanliness where the marginal cost of cleaning equals the marginal benefit of cleaning

The approach to natural monopolies in the US is to

subject them to regulation

In order to buy goods from another country the importer must pay with

the currency of the country from which it is buying the goods that it has arranged to get through the foreign exchange market

The dollar to yuan exchange rate will equal

the reciprocal of the yuan-dollar exchange rate

Which of the following environmental problems is among the least-easily solved? A. waste water treatment B. a nation's air pollution issues C. a nation's coastal water pollution issues D. The world's global warming issues

the world's global warming issues

The current account and the trade balance are so closely aligned because the current account is the

trade balance plus the net amount received for domestically-owned factors of production used abroad

Economists refer to the problem that exists when public property is treated poorly because it is in no one's private interest to protect it as the

tragedy of the commons

Why is there a deadweight loss to society

underproduction

Under the Sherman Anti-Trust Act, it is illegal to

use monopoly power in one market to foster a monopoly in another

Know how to calculate market equilibrium (pc and monopoly), consumer and producer surplus (pc and monopoly), deadweight loss

use worksheet, formulas