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.