In the health insurance market, moral hazard occurs when
A) chronically ill people buy insurance.
B) insured people go to the doctor unnecessarily.
C) patients sue their doctor.
D) chronically ill people refuse appropriate medical treatment.
Ques. 2Tris is shopping for pants and belts. He has a budget of 100. The price of a pair of pants is 20 and the price of a belt is 5. His marginal utility schedules are above. What combination of pants and belts does Tris buy? Explain your answer.
What will be an ideal response?
Ques. 3In the long-run equilibrium for a perfectly competitive market
A) the firms' economic profits are zero.
B) there is no incentive for entry or exit.
C) average total costs of production are minimized.
D) All of the above are correct.
Ques. 4Collusive agreements tend to break apart because the incentive to cheat is so great.
Indicate whether the statement is true or false
Ques. 5Technological efficiency occurs when it is not possible for a firm to get more output from the inputs it is currently using.
Indicate whether the statement is true or false
Ques. 6The loss of efficiency that occurs in monopolistic competition has to be weighed against the gain of
A) higher wages for employees.
B) an increase in employment.
C) greater product variety.
D) reduced environmental damage.
Ques. 7The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is ________.
A) 0 tons per week
B) 400 tons per week
C) 300 tons per week
D) None of the above answers is correct.
Ques. 8In the market for automobile insurance, moral hazard implies that
A) those who are insured might take greater risks.
B) those who are uninsured might take greater risks.
C) insured and uninsured alike will take greater risks.
D) drivers with greater risks are more likely to buy insurance.
Ques. 9The above figure shows the market for labor. The employer is a monopsony. If a minimum wage of 10 is imposed, the equilibrium level of employment is
A) 200 hours per day.
B) 400 hours per day.
C) 600 hours per day.
D) 800 hours per day.
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