Question 1
A situation in which having insurance causes people to take greater risks is called:
a) Adverse Selection
b) Moral Hazard
c) A mixed market
d) Asymmetric Information
Question 2
Public goods are:
a) Rival and excludable
b) Rival and nonexcludable
c) Nonrival and nonexcludable
d) Nonrival and excludable
Question 3
How have insurance companies attempted to overcome the adverse selection problem?
a) They have switched to experience rating (which bases premiums based on historical medical costs of a given firm)
b) They discourage institutions from providing group insurance in an attempt to keep high-risk individuals out of the pool of customers.
c) They lower premiums to encourage lower risk people to buy insurance
d) All of the above
Question 4
Which of the following is a correct statement?
a) Both purely competitive and monopolistic firms are "price takers."
b) Both purely competitive firms and monopolistic firms are "price makers"
c) A purely competitive firm is a "price-taker" and a monopolistic firm is a "price-maker"
d) A purely competitive firm is a "price-maker" and a monopolistic firm is a "price-taker"
Question 5
The demand curve confronted by the individual purely competitive firm is:
a) Relatively Elastic
b) Perfectly elastic
c) Relatively inelastic
d) Perfectly inelastic
Question 6
Pure monopolists may obtain economic profit in the long-run because:
a) Of advertising
b) Marginal revenue is constant as sales increase
c) Of barriers to entry
d) Of rising average fixed costs
Question 7
What is the marginal principal? Provide an example of marginal principal related to health economics
Question 8
Under what conditions will a firm be able to price discriminate?
Question 9
An industry is characterized as having many firms, a differentiated product, no barriers to entry and elastic demand. What is it's market structure?
Perfectly competitive
Oligopoly
Monopolistic Competition
Monopoly
Question 10
The individual mandate under the Affordable Care Act was intended to prevent which of the following?
a) Rising health care costs
b) The number of uninsured
c) Adverse selection
d) Moral hazard
Question 11
Which of the following conditions is NOT NECESSARY in order for a firm to price discriminate?
The product cannot be resold
The firm must have some market power
The firm must have many buyers and sellers
The market can be segmented into different groups of consumers
Question 12
Which of the following statements correctly identifies economies of scale in production?
The long-run average cost of production does not change as quantity supplied increases
The long-run average-cost of production decreases as the quantity supplied increases
The long-run total cost of production decreases as the quantity supplied increases
The long run average cost of production increases as the quantity supplied increases
Question 13
Which of the following correctly identifies the price at which a firm should shut-down?
Price is greater than the average variable cost
Price is equal to the marginal cost
Price is less than the total cost
Price is less than the average variable cost
Question 14
Which of the following market structures experiences a "Nash Equilibrium" in terms of pricing behavior?
Perfect competition
Oligopoly
Monopoly
Monopolistic Competition
Question 15
Which of the following is NOT considered a criteria of an "efficient market"?
Perfect information
Positive externalities exist
Lots of buyers and sellers
No barriers to entry and market is perfectly competitive
Question 16
The Affordable Care Act DOES NOT directly address which of the following market failures or inefficiencies
Access problems when individuals have pre-existing conditions
Unsustainable increase in health care costs in long-run
Adverse selection
Health insurance not affordable to low income individuals and families
Question 17
For which of the following goods is the demand curve likely to be the most inelastic?
Taxicab transportation for a family vacationing in DC
Insulin for a diabetic
An Apple Smartphone
Elective cosmetic surgery
Question 18
Which of the following is the best example of a public good?
National defense
A local gas station
A city-owned electric power generating plan
Public Universities
Question 19
A perfectly competitive firm has the following option with respect to how it sets price:
Are required to accept below-market prices if they wish to sell their product
Often set the price of their product above the market equilibrium to take advantage of market imperfections
Have a great deal of latitude when it comes to setting the price of their product
Have little choice but to accept the prevailing market price for their product
Question 20
Which of the following is NOT a basic characteristic of a monopoly?
There is only one firm in the industry
There are no close substitutes for the product
The demand for the monopolist's product is highly inelastic
There are barriers to entry into the market.