Econ online hw exam 2

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?

$5

The first-quarter decline in U.S. RGDP was

among the top ten worst quarters in post-World War II history.

Combined the consumer surplus and producer surplus at equilibrium is

as big as it can be

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.

One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is

domestic production (cooking, laundry and such) are not counted.

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

elderly

One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is

environmental quality is ignored.

To say that a good is nonexcludable means that

everyone has access to it without paying

An example of an external cost of tobacco is

increased SIDS deaths to the children of smokers.

If a health economist is worried that a system of health insurance will break down because those with health insurance will be less likely to eat right and exercise because they will not be financially liable for the health care costs that follow, that economist is focused on the problem of

moral hazard

Perfect competition means that firms are

price takers (firms must accept the price of the market).

Marginal Cost is

the addition to cost associated with one additional unit of output.

consumer surplus is defined as

the value that the consumer places on a good over the amount they pay for it

An example of an external cost of alcohol is

traffic fatalities attributable to drunk driving.

an example of an external cost of tobacco is

unnecessary deaths produced by second hand smoke

Economic Profit exists whenever

a firm makes more than the minimum required to maintain the incentive to remain in the industry.

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

a single seller

Dominant Strategy

a strategy that is best for a player in a game regardless of the strategies chosen by the other players

If a health economist is worried that a system of health insurance will break down because, when combined with policies outlawing the use of an individual's health information in setting coverage and rates, the sickest will be the only one who will want insurance and the healthiest will go without insurance, that economist is focused on the problem of

adverse selection

Policy makers have considered putting computer chips in cars that would allow tax collectors to charge people on the basis of how often they drive during rush hours. These policy makers are dealing with the fact that public roads are

congestible public goods.

4. To say that a good is nonrival means that

consumption of the good by one person does not diminish the availability of the good to others.

When a satellite television company gains a subscriber, there is no impact on existing subscribers. That is, there is no rivalry in the consumption for their service. This is an example of a(n)

excludable public good.

Among the very real problems of tobacco, alcohol, and illegal goods and services are

external costs

Many economists note that the shortage of organs is, at least in part, attributable to the fact that the price of organs is

fixed at zero

many economists note that the shortage of blood in several rare types is, at least in part, attributable to the fact that the price of blood is

fixed at zero

the assumption for perfect competition and monopolistic competition that enables economic profit to move towards zero is

freedom of entry and exit

The unemployment rates for April and May 2020 were ________ those experienced during the Great Recession.

greater than

Under oligopoly, there are

high barriers to entry

A cross-country analysis of health expenditures and statistics suggests that expenditures (as a percentage of GDP) in the U.S. are ________ than the rest of the world, and that treatment in the U.S. is

higher; less effective in some areas and more effective in other areas.

one of the reasons that RGDP is not synonymous with social welfare is

it ignores the value of leisure

How does GDP deal with a Toyota produced in Kentucky?

it is fully counted

How does GDP deal with a Ford produced in Mexico?

it is not counted at all

when a firm chooses to shut down, it is

making a good decision as long as the price is getting less than its average variable cost

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

On health care issues, the U.S. generally spends

much more as a percentage of GDP than other nations.

a pure public good is one that

neither rivalry nor exclusivity hold

1. An industry in which there are only a few firms is likely to be characterized by which market structure?

oligopoly

The freedom of entry and exit is key to pressuring economic profit to zero under

perfect competition and monopolistic competition.

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

poor

People generally buy insurance of any kind because they are

risk adverse

Nash Equilibrium

the combination of strategies in a game such that neither player has any incentive to change strategies given the strategy of the other player

The assumption under perfect competition of a "homogeneous product" means that

the good one firm produces is exactly the same as the good another firm produces.

Average Variable Cost is

the per unit variable cost of production.

The key difference(s) between perfect competition and monopolistic competition is

the products sold are slightly different in monopolistic competition.