As an individual moves northwest along an indifference curve substituting more and more Y for X, his or her MRS of X for Y
a. increases.
b. decreases.
c. stays the same.
d. changes in a way that cannot be determined.
QUESTION 2In profit centers
a. Managers are difficult to evaluate because there is no simple metric of how well they performed
b. Managers typically do not have the information to run their division efficiently
c. Managers' decisions rarely affect other divisions
d. Managers typically have ample incentives to run their division efficiently
QUESTION 3Most empirical studies show that the cost-savings provided by managed care are accomplished by
a. better preventive care.
b. reducing the rate of hospitalization.
c. denying access to costly specialty care.
d. switching to generic drugs.
e. all of the above.
QUESTION 4If an individual's indifference curve map does not obey the assumption of a diminishing MRS, then
a. the individual will not maximize utility.
b. the individual will buy none of good X.
c. tangencies of indifference curves to the budget constraint may not be points of utility maximization.
d. the budget constraint cannot be tangent to an appropriate indifference curve.
QUESTION 5In profit centers
a. Managers are difficult to evaluate because there is no simple metric of how well they performed
b. Managers typically do not have the information to run their division efficiently
c. Managers' decisions can affect other divisions
d. Managers typically do not have the incentives to run their division efficiently
QUESTION 6The RAND Health Insurance experiment compared costs of HMOs with the costs of indemnity insurers. The study
a. confirmed the cost-saving potential of HMOs.
b. Found no cost-saving by HMOs.
c. the HMO had per capita costs that were 28 lower than the indemnity
d. both a and c
QUESTION 7Suppose that at current consumption levels an individual's marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2 . Then the MRS (of soft drinks for hot dogs)that is, the number of hot dogs the individual is willing to give up to get one more soft drink is
a. 5
b. 2
c. 1/2
d. 1/5
QUESTION 8In profit centers
a. Managers are difficult to evaluate because there is no simple metric of how well they performed
b. Managers typically have the necessary information to run their division efficiently
c. Managers' decisions rarely affect other divisions
d. Managers typically do not have the incentives to run their division efficiently
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