my deck 432

Question 1

The average rate of copayments for sick visits increases by 50%. As a result, patients are less willing to go to the doctor when they are ill. This change is a result of a change in ____.

Answer 1

incentives

Question 2

Susan decides to spend $10 on vitamins instead of buying some ice cream and a coke with her $10 bill. The ice cream and coke are her _____.

Answer 2

opportunity cost

Question 3

Drug companies must decide how much money to spend on research and development: 1/3 of their budget, 1/8 of their budget, etc. This is an example of _____.

Answer 3

marginal analysis (on the margin)

Question 4

Hospitals are able to purchase medical supplies more cheaply per unit than small doctor’s offices because they receive a bulk discount for large orders. This is an example of ____.

Answer 4

economies of scale

Question 5

John and Pam are trying to decide how to divide up housework for the day. John can fold 5 loads of laundry in one hour OR can vacuum 2 rooms. However, Pam is able to fold 3 loads of laundry in one hour OR vacuum 1 room. Select the correct answer below.

Answer 5

John has the absolute advantage in both folding laundry and vacuuming rooms.

Question 6

John and Pam are trying to decide how to divide up housework for the day. John can fold 5 loads of laundry in one hour OR can vacuum 2 rooms. However, Pam is able to fold 3 loads of laundry in one hour OR vacuum 1 room. Select the correct answer below.

Answer 6

John’s opportunity cost of folding laundry is equal to 2/5 of a vacuumed room.

Question 7

John and Pam are trying to decide how to divide up housework for the day. John can fold 5 loads of laundry in one hour OR can vacuum 2 rooms. However, Pam is able to fold 3 loads of laundry in one hour OR vacuum 1 room. Select the correct answer below.

Answer 7

John has the comparative advantage in vacuuming and Pam has the comparative advantage in folding laundry.

Question 8

Jane can write 3 poems in an hour or she can write 49 pages of her novel. Her opportunity cost of 1 poem is _____ novel pages. (Round to the nearest hundreth)

Answer 8

16.33

Question 9

Assume a country develops a new technology which allows them to drastically increase their production of all different types of goods. How would you represent this change on a production possibilities frontier for that country?

Answer 9

the PPF will shift outwards

Question 10

If consumers believe that the price of limes will increase next week, ______________.

Answer 10

demand for limes today would increase

Question 11

Assume the price for desktop computers increases.

Answer 11

The demand for laptop computers will increase.

Question 12

Assume consumers’ preference for being able to work on the go increases.

Answer 12

The demand for laptop computers will increase.

Question 13

Assume the cost of hard-drives drastically decreases.

Answer 13

The supply of laptops will increase.

Question 14

Assume the technology for iPads drastically improves so that they are as functional as laptops.

Answer 14

The demand for laptops will decrease.

Question 15

The price of laptop computers increases (say, because of government intervention).

Answer 15

The quantity demanded of laptops will decrease.

Question 16

Assume laptop suppliers are making negative profits, and these profit losses entice companies to shift production away from laptops.

Answer 16

The supply of laptops will decrease.

Question 17

If the equilibrium price of Tylenol is $5.50 per bottle and the quantity sold is equal to 15,000.

What is producer surplus, if we assume 0 bottles are supplied at a price of $0.50.

Answer 17

37,500

Question 18

If the equilibrium price of Tylenol is $5.50 per bottle and the quantity sold is equal to 15,000.

What is consumer surplus, if we assume consumers want to buy 0 bottles at a price of $11.50?

Answer 18

45,000

Question 19

A subsidy to suppliers of wheat would _______.

Answer 19

increase the supply of wheat (shift to the right).

Question 20

Which of the following will definitely occur when there is a simultaneous decrease in demand and a decrease in supply?

Answer 20

a decrease in equilibrium quantity

Question 21

If a ________ exists in a free market, over time price will _____ until the market returns to equilibrium.

Answer 21

shortage; rise

Question 22

Select the statement below that is TRUE.

A change in quantity demanded is a shift of the demand curve, where a change in demand is a movement along the same demand curve.

A change in quantity demanded is a movement along the same demand curve, where a change in demand is a shift of the demand curve.

There is no difference between a change in demand and a change in quantity demanded.

A change in quantity demanded is an increase where a change in demand is a decrease

Answer 22

A change in quantity demanded is a movement along the same demand curve, where a change in demand is a shift of the demand curve.

Question 23

Assume the government places a $3 tax on organic produce. Before the tax, 100 pallets were sold at a price of $30 per pallet. After the tax, consumers must pay $32.50 per pallet and the quantity sold decreases to 95. What price do producers receive for selling one pallet of produce?

Answer 23

$29.50

Question 24

Assume the government places a $3 tax on organic produce. Before the tax, 100 pallets were sold at a price of $30 per pallet. After the tax, consumers must pay $32.50 per pallet and the quantity sold decreases to 95.
What is the deadweight loss resulting from the tax?

Answer 24

$7.50

Question 25

ssume the government places a $3 tax on organic produce. Before the tax, 100 pallets were sold at a price of $30 per pallet. After the tax, consumers must pay $32.50 per pallet and the quantity sold decreases to 95.
Consider the impact of the tax on consumers and producers (who pays more): what does this tell you about the elasticity of supply and demand?

Answer 25

demand must be relatively more inelastic than supply, since consumers pay a larger portion of the tax

Question 26

Assume the government places a $3 tax on organic produce. Before the tax, 100 pallets were sold at a price of $30 per pallet. After the tax, consumers must pay $32.50 per pallet and the quantity sold decreases to 95.
What is the tax revenue collected by the government?

Answer 26

$285

Question 27

Which of the following is true?

who gets the subsidy does not depend on who gets the check from the government

subsidies must be paid for by taxpayers and they create inefficient decreases in trade

with a subsidy, the price paid by the buyers exceeds the price received by sellers

who benefits from a subsidy does not depend on the relative elasticities of demand and supply

Answer 27

who gets the subsidy does not depend on who gets the check from the government

Question 28

When a price floor is in place keeping the price above the market price, what’s larger: quantity demanded or quantity supplied?

Answer 28

quantity supplied is larger

Question 29

Suppose new medical innovations drastically increased the productivity of drug manufacturing. Given this change, the price of drugs would ____because ____ would shift to the right.

Answer 29

Decrease, supply

Question 30

Suppose new medical innovations drastically increased the productivity of drug manufacturing. Given this change, the price of bottles for prescription drugs would likely _____ because _____ for bottles would shift to the right

Answer 30

Increase, Rise