1. Name four differences between the medical market and regular markets.
2. What is elasticity?
3. Name two products that are substitutes.
4. Name two products that are complements.
5. Is the demand for medical care price elastic or price inelastic?
6. What is the income elasticity for medical care?
7. If fixed costs are 500 and variable costs are 10 and the price is 20, at what quantity will you break even?
8. If fixed costs are 1000 and variable costs are 100 and the price is 150, what would be your profit or loss if you sold 75 units?
9. Should you maximize revenue or maximize profits?
10. Where do you maximize profits?
11. What is a sunk cost?
12. Can a company become too big? Why?
13. If you are experiencing diseconomies of scale, what should you do?
14. What is "Learning by Doing" suggest about average costs?
15. What is information asymmetry?
16. What are the four types of market structures?
17. What are four barrier to entry?
18. How long does a patent last?
19. What is the problem with patents and new drugs?
20. Can the drug approval process harm people?
21. What is an example of a network externality?
22. How do monopolists increase profits?
21. What happens to marginal revenue when a monopolist reduces price?
22. What are antitrust laws?
23. Do monopolies generally last very long without government protection?
24. What is a natural monopoly?
25. Does it always make sense to hire the lowest-wage employee?
Wednesday, November 26, 2014
Monday, November 3, 2014
Exam 1
1.
Economics is the study of
A.
money and financial instruments
B.
stocks and bonds
C.
choice under scarcity
D.
rational incentives at the margin
2.
Economists assume people are
A.
rational, respond to incentives, and make decisions at the margin
B.
rational optimizers, and selfish
C.
logical, responsible, and irrational
D.
marginal, chaotic, and rational
3.
If you change someone’s incentives, you may change their________.
A.
worldview
B.
behavior
C.
political view
D.
none of the above
4.
What is opportunity cost?
A.
the lowest valued alternative
B.
what your competitor does
C.
the highest valued alternative
D.
the actual cost in money
5.
What is comparative advantage?
A.
being better at everything
B.
taking advantage of the competition
C.
having a lower opportunity cost than someone else
D.
foreign direct investment
6.
What does a production possibilities curve illustrate?
A.
the tradeoff between two alternatives
B.
the tradeoff between three alternatives
C.
the possible opportunity costs between four comparative advantages
D.
the comparative advantages of three products
7.
What is the difference between positive economics and normative economics?
A.
positive is about good things, normative is about normal expectations
B.
positive is about marginal utility and normative is about opportunity costs
C.
positive is about what is imaginary and normative is about what is real
D.
positive is about what is and normative is about what ought to be
8.
What does the law of diminishing marginal utility mean for medical spending and
health?
A.
as I spend more and more, I tend to get less and less of a gain
B.
health care is a right
C.
health declines as you spend more money
D.
happiness is achieved by spending more and more on medical care
9.
Who wins when a trade occurs?
A.
buyers
B.
sellers
C.
both buyers and sellers
D.
neither
10.
How many more people are on the earth today than in 1800?
A.
similar number
B.
3 times more
C.
5 times more
D.
7 times more
11.
How do you expand the production possibilities curve?
A.
more shovels
B.
innovation and more resources
C.
more hard work
D.
cannot change without government permission
12.
What is more important; goals or incentives?
A.
goals
B.
incentives
C.
both are equally important
D.
neither are important to economists
13.
What is wealth?
A.
oil
B.
money
C.
what people want
D.
health care
14.
Where is the iPhone made?
A.
California
B.
China
C.
all over the planet
D.
Europe and Asia
15.
Do people always have opportunity costs?
A.
always
B.
most of the time
C.
sometimes
D.
never, if they are rich
16.
What is an economic model?
A.
a simplified version of reality
B.
a two-way matrix
C.
a production impossibilities curve
D.
a pattern of efficiency, inefficient, and unobtainable locations
17.
What are the primary concerns with third-party arrangements?
A.
costs and benefits
B.
complexity and incentives
C.
choice and scarcity
D.
production and distribution
18.
What else do we call benefits?
A.
diverted costs
B.
opportunities
C.
utility index
D.
none of the above
19.
Where is the optimal amount of health care?
A.
total costs equal total benefits
B.
total benefits are maximized
C.
marginal costs equal marginal costs
D.
minimize costs and maximize benefits
20.
What are two ways to value a life under cost-benefit analysis?
A.
opportunity costs and human capital
B.
willingness-to-sell and yield inversion
C.
present value discounting and future value compounding
D.
human capital approach and willingness-to-pay approach
21.
What is the weakness of the human capital approach?
A.
easy to estimate
B.
ignores everything but income
C.
HUI is too low
D.
actuarial advantage
22.
If I spend 100 riyals to reduce the risk of death by 1 in 2000, what value do I
give my life?
A.
2,000
B.
20,000
C.
200,000
D.
500,000
23.
When there is a new innovation in medicine, what two things can happen?
A.
more life for the same cost or same life for lower cost
B.
more cost for the same life or same cost for less life
C.
actuarial advantage or inverted yields
D.
positive economics and normative economics
24.
Cost Effective Analysis does what?
A.
compares the marginal costs of two treatments
B.
compares the costs of one treatment to the benefits of a human capital estimate
C.
compares the cost effectiveness of two or more options
D.
compares the human capital estimate to the human utility index
25.
Can something that is less costly and less effective and still be valuable?
A.
yes
B.
no
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