EXAM 2 PREP

Average fixed cost equation

AFC= Fixed cost/ quantity

GDP equation

GDP= C + G + I + X x= exports- imports

Marginal product of labor equation

MPL= change in quantity/ change in labor

Variable Cost equation

VC= wage x labor

if a health economic is worried that. 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

the first-quarter decline in US RGDP was

among the top ten worst quarters in post-world war II history

the children's health insurance program is designed to

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

combined the consumer surplus and producer surplus at equilibrium is

as big as it can be

According to ch. 8 of the Economic Naturalist, which one of the following helps to explain the higher rate of aluminum can recycling in Brazil than in the United States?

because average income in Brazil is lower than in the U.S.

Ch 6 Economic naturalist, why do most states have mandatory kindergarten start dates?

because parents have the incentive for their children to be older than others in the class so that they are better able to succeed in academics and athletics relative to the other student

Which of the following explains why Target would promote prescription drugs at its in-store pharmacies, according to Chapter 9 in the Economic Naturalist?

because target knows that customers who buy prescriptions will have to wait for the prescription to be filled and they will be likely to browse in the store

According to Ch. 8 of the Economic Naturalist why do many movie theater in the US offer open seating whereas movie theaters in Asia have reserved seating?

because there are more movie screenings in the US relative to the population size, partly because of lower land prices in the US

according to Ch. 8 of the Economic Naturalist why do Europeans prefer smaller automobile engines than people in the US?

because they pay higher gasoline taxes than in the US

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

contestable public goods

medicare is the federal government program that provides health insurance to the

elderly

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, attribute to the fact that the price of organs is

fixed at zero

costs which do not increase with an increase in output are called

fixed costs

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 US are ____ than the rest of the world, and that treatment in the US is

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

an example of an external cost of tobacco is

increased deaths to the people who suffer from second hand smoke

the marginal cost curve usually

is j-shaped, cuts through the minimum of the average variable cost curve, cute through the minimum of the average total cost curve

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 finically liable for the health care costs that follow, that economist is focused on the problem of

moral hazard

according to ch. 7 in the EN, which of the following is a reason that DVD formats differ between countries, where as CD formats do not differ?

movie companies earn revenue from both movie theater and DVD sales, but recording labels do note earn revenue from band tours

on health care issues, the US generally spends

much more as a percentage of GDP that other nations

a pure public good is such that

neither rivalry nor exclusivity hold

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

perfect competition means that firms are

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

people generally buy insurance of any kind because they are

risk adverse

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 them ($500) with the $600 premium it would cost to get full coverage and decided to buy the insurance, then economists would say they are

risk-adverse

Which of the following an explanation given in Chapter 7 of the Economic Naturalist on why slightly used care sell for much less than brand-new cars?

some used cars will be defective and it is difficult to tell them apart from good cars, you generally keep good cars so if they are barely used the price is lower

marginal cost is

the addition to cost associated with one additional unit of output

which of the following is NOT an example of the tragedy of the commons according to chapter 6 in the EN?

the caviar market under the Soviet Union

when workers subdivide the tasks of a job to become more efficient, economists refer to this as

the division of labor

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 total cost is

the per unit cost of production

average fixed cost is

the per unit fixed cost of production

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

consumer surplus is defines 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

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 42 for ingredients, $1 fro labor, and then $1 in profit. What is the GDP contribution of the pie?

$5

Average total cost equation

ATC= AFC + AVC ATC= TC/Q

Average variable cost equation

AVC= Variable Cost/ quantity

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

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

it ignores the value of leisure, it treats all spending the same

in EN ch. 9 which of the following is a reason given that more firms are hiring companies to provide custodial services?

it is easier to pay lower wages for custodial services is the outside contractor is a smaller, less successful employer

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 shutdown, it is

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

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

a key assumption about the way firms behave is that they

maximize profits

Which of the following is NOT an explanation given in ch. 9 of the Economist naturalist on why department stores are more likely to provide easier access to the men's clothing department than the women's clothing department?

men spend more than twice as much on clothing purchases so stores need to make sure that they don't have a hard time finding the men's clothing section