If a hospital is experiencing economies of scale,

If a hospital is experiencing economies of scale,
 a. its average cost curve is positively sloped as output increases.
  b. its average cost curve is negatively sloped as output increases.
  c. it should reduce its output level to lower costs.
  d. quality is falling as output is rising.
  e. both b and c are true.

QUESTION 2

A firm that is maximizing its profits will keep renting machines up to the point where:
 a. the marginal productivity of a capital is maximized.
  b. the marginal value product of machines is maximized.
  c. the marginal value product of machines is equal to the market rental rate for machines.
  d. the machine's market rental rate is minimized.

QUESTION 3

To keep employees from shirking, you can invest in greater monitoring
 a. even though monitoring is expensive
  b. especially when monitoring is not very efficient
  c. when employees fail to respond to incentive contracts
  d. when incentives solve both moral hazard and adverse selection problems with employees

QUESTION 4

Suppose robotic technology improves the results of abdominal surgeryless time to perform the surgery, faster recovery times, and fewer mistakes. What is the impact on the market for abdominal surgery using this new technology?
 a. Demand for robot-assisted surgery will increase.
  b. Hospitals will be slow to adopt the new technology fearing that it may result in lower prices.
  c. The demand for surgical assistants will increase.
  d. All of the above.

QUESTION 5

Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (c1 and c2). Any funds not spent in period 1 will earn interest (at the rate r) which will increase purchasing power in period 2 . Consider four possible reactions to an increase in r: I. c1 increases. II. c1 decreases. III. c2 increases. IV. c2 decreases. Which of these is consistent with the hypothesis that both c1 and c2 are normal goods?
 a. I, II, III, and IV
  b. I, II, and IV, but not III
  c. I, III, and IV, but not II
  d. I, II and III, but not IV

QUESTION 6

To keep employees from shirking, you can invest in greater monitoring
 a. even though monitoring is expensive
  b. especially when monitoring is efficient
  c. when employees respond well to incentive contracts
  d. when incentives solve both moral hazard and adverse selection problems with employees

QUESTION 7

Suppose the U.S. Drug Enforcement Agency steps up its efforts to control the illegal importation of cocaine into the United States. What is the likely effect on the market for illegal drugs in the United States?
 a. The price of cocaine and the quantity imported will both increase.
  b. The price of cocaine is likely increase and the quantity entering the country decrease.
  c. The price of marijuana, a cocaine substitute grown domestically, will fall.
  d. The policy will have the least impact on those individuals whose demand for drugs is elastic.
  e. Demand for drugs is highly inelastic and these policies have little or no effect on consumption.

QUESTION 8

In Fisher's model of the determination of the rate of return, the price of a future good is:
 a. less than the price of a current good if the interest rate is negative.
  b. equal to the price of a current good if the interest rate is positive.
  c. greater than the price of a current good if the interest rate is positive.
  d. less than the price of a current good if the interest rate is positive.