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| 1 | |
Which of the following statements is true regarding health insurance? |
| | A) | Economics shows that all health related procedures should be free to individuals because the health of an individual is priceless. |
| | B) | Total economic surplus would be larger if individuals faced an incentive to only use services when the benefit exceeds their costs. |
| | C) | Health maintenance organizations provide an incentive for doctors to prescribe expensive nonessential services. |
| | D) | First dollar insurance coverage has likely had very little to do with rising healthcare expenditures since World War II. |
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| 2 | |
Use the following diagram, representing an individual's demand for hospital care to answer the following question.
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If the costs of hospital care are constant at $200 per day, and the individual does not incur any cost for each day for hospital care, then: |
| | A) | the individual will stay 7 days and there will be no loss in economic surplus. |
| | B) | the individual will stay 3 days and there will be no loss in economic surplus. |
| | C) | the individual will stay 7 days and there will be lost economic surplus. |
| | D) | the individual will stay 3 days and there will be lost economic surplus. |
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| 3 | |
Economic research by Manning and colleagues suggests that people with deductible health insurance policies: |
| | A) | spend substantially less on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. |
| | B) | spend substantially more on health care and have substantially better health outcomes compared to people with first-dollar insurance coverage. |
| | C) | spend basically the same amount on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. |
| | D) | spend substantially less on health care and have no measurable difference in health outcomes compared to people with first-dollar insurance coverage. |
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| 4 | |
An efficient program for reducing pollution is one for which: |
| | A) | all polluters incur the same total costs of abatement. |
| | B) | all polluters pay the same amount in taxes to the government. |
| | C) | all polluters have the same marginal costs of abatement. |
| | D) | all polluters reduce their emissions by the same amount. |
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| 5 | |
Use the following table on firms' pollution emissions to answer the following question. Quantity of pollution abatement | Firm A's MC of abatement | Firm B's MC of abatement | 1 | $30 | $25 | 2 | $35 | $30 | 3 | $40 | $35 | 4 | $45 | $40 |
Given the information on pollution abatement costs of the two firms shown above, which of the following is an efficient combination of pollution reduction? |
| | A) | Firm A reduces by 1 ton and Firm B reduces by 1 ton. |
| | B) | Firm A reduces by 2 tons and Firm B reduces by 3 tons. |
| | C) | Firm A reduces by 4 tons and Firm B reduces by 1 ton. |
| | D) | Firm A reduces by 3 tons and Firm B reduces by 2 tons. |
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| 6 | |
An advantage of the auction method to pollution abatement is that: |
| | A) | it is very expensive to firms. |
| | B) | regulators can achieve a desired abatement target without having detailed knowledge of the abatement technologies available to polluters. |
| | C) | it requires all firms to reduce by exactly the same amount. |
| | D) | it assures that eventually society will reach a level of zero pollution emissions. |
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| 7 | |
There are 2 firms each emitting 200 tons of a pollutant. Firm A's abatement costs are constant at $20/ton, and Firm B's abatement costs are constant at $40/ton. The government's goal is to reduce pollution by half. If the government auctions 200 one ton permits to the highest bidder: |
| | A) | Firm A will purchase all 200 permits. |
| | B) | Firm B will purchase all 200 permits. |
| | C) | each firm will buy 100 tons. |
| | D) | there is no way to know who the highest bidder for any permit would equal. |
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| 8 | |
Generally, when countries open their borders to free trade: |
| | A) | both domestic producers and consumers of imported goods gain. |
| | B) | both domestic producers and consumers of exported goods gain. |
| | C) | domestic producers of imported goods and domestic consumers of exported goods gain. |
| | D) | domestic producers of exported goods and domestic consumers of imported goods gain. |
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| 9 | |
Which of the following is the best example of a tariff? |
| | A) | South Korea bans imports of U.S. beef because of safety concerns. |
| | B) | The U.S. requires toys imported from China to undergo testing for lead content. |
| | C) | The U.S. imposes a tax on sugar imported from Brazil. |
| | D) | The U.S. restricts the quantity of cars imported from Japan. |
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| 10 | |
A means-tested program is a benefit program: |
| | A) | in which benefits decline as a recipient's earned income increases. |
| | B) | in which all individuals must undergo health screening to be eligible for benefits. |
| | C) | in which all recipients exclusively receive benefits through in-kind transfers. |
| | D) | that only affects the average income of a specific segment of the population. |
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