Efficient production of a public good requires:
a. that individuals pay for such goods according to benefits received.
b. that each individual's MRS be equal to the RPT of public goods for private goods.
c. that the sum of individuals' MRSs be equal to the RPT of public goods for private goods.
d. that governments produce at the low point of the average cost curve for the public good.
QUESTION 2When decision rights are decentralized, typically
a. decisions are being moved to those with more of the relevant information
b. decisions are being moved to those with stronger incentives to make good decisions
c. decisions are being moved from those with more of the relevant information
d. decisions are being moved from those with weaker incentives to make good decisions
QUESTION 3The RAND Health Insurance Study
a. examined cross-section data to estimate the demand function for medical care.
b. was the most extensive controlled experiment in health insurance ever conducted in the United States.
c. like most economic studies, was based on individual decisions in voluntarily choosing health insurance coverage.
d. was flawed due to severe self-selection bias.
e. was set up to study medical outcomes when individuals were free to choose the type of health coverage they desired.
QUESTION 4Perfectly competitive markets will tend to under-allocate resources to nonexclusive public goods because:
a. these goods are produced under conditions of increasing returns to scale.
b. no single individual can appropriate the total benefits provided by the purchase of such goods.
c. these goods are best produced under conditions of monopoly.
d. no private producer can provide the capital necessary to produce such goods.
QUESTION 5When decision rights are decentralized, typically
a. decisions are being moved to those with less of the relevant information
b. decisions are being moved to those with stronger incentives to make good decisions
c. decisions are being moved away from those with more of the relevant information
d. decisions are being moved to those with weaker incentives to make good decisions
QUESTION 6A physician's ability to induce demand is greatly enhanced when
a. patients pay their own medical bills.
b. patients request follow-up visits.
c. patients have difficulty gathering and processing information.
d. the physician follows strict treatment guidelines.
e. treatment options are limited.