HSPM 412 SELF-CHECKS EXAM QUESTIONS WITH CORRECT ANSWERS| LATEST UPDATE
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The economics of health and health care is different from the economics at work in other,
smaller markets because ______. demand for healthcare is uncertain, health insurance is
very common, health is contagious
Economics is the study of the allocation of _____ to satisfy ______. limited resources,
unlimited wants
Based on Robinson Crusoe's PPF (below), the combination of goods (30 birds, 80 crabs) is
______. unattainable (because this combination of crabs and birds lays beyond the frontier)
Which of the following statements about indifference curves is (are) FALSE? A set of
Indifference curves shows the maximum possible output combinations of two goods or services
an economy can achieve when all resources are fully and efficiently employed.
(Indifference curves ACTUALLY show consumer preferences, identifying every possible
combination of goods that give the consumer the same amount of satisfaction.)
Based on the production possibilities frontier (PPF) and indifference curves below, Rob's
optimal combination of goods is ______. 15 birds and 17 crabs!
The optimal combination of birds and crabs is identified at the point where Rob's PPF is tangent
to (touching but not intersection) one of his indifference curves.
The terms "demand" and "supply" refer to the behavior of people as they interact with one
another in a market: _______ represents the behavior of buyers and _____ represents the
behavior of sellers DEMAND=BUYERS
SUPPLY=SELLERS
Summers in Columbia are (famously?) HOT. During a heat wave, we expect that the demand for
lemonade will ______. increase aka the demand curve will shift OUTWARD
,Peanut butter and Jelly are typically consumed ______ and as such are though of as ______
goods. together; complement
A peanut shortage causes the price of peanuts - along with the price of peanut butter - to
increase by 40%. As a result, we expect demand for jelly to ______ . decrease aka the
demand curve will shift INWARD (this is because they are complement goods, so their demand
patterns normally follow eachother)
Producer surplus is the difference between a seller's cost to produce a good and the amount a
seller is actually paid for it (market price) and is represented by the area ______. ABOVE the
supply curve and BELOW the market price
When the price of fresh tomatoes decreases by 10%, the quantity demanded of fresh tomatoes
increases by 46%. Calculate the price elasticity of demand for fresh tomatoes. -4.6
% change in quantity demanded / % change in price
(the price elasticity of demand will always be negative)
The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
All else equal, how does the heat wave affect the equilibrium price and quantity of lemonade?
Both equilibrium price and equilibrium quantity will increase
(The July heat wave leads to an increase in the demand for lemonade (demand shifter:
CONSUMER TASTES).
The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to
$0.99/lb. How will the changing market conditions affect the EQUILIBRIUM QUANTITY of
lemonade? Equilibrium quantity will increase
, The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to
$0.99/lb. How will the changing market conditions affect the EQUILIBRIUM PRICE of lemonade?
The change in equilibrium price is ambiguous (we don't have enough information to be
certain)
The demand for wifi-enabled robot vacuums is more elastic than the demand for lifesaving
epinephrine. In the figure below, the market for epinephrine is best represented by the graph
on the ______ while the market for iRobot vacuums is best represented by the graph on the
______. left; right
BECAUSE the price elasticity of demand is related to the slope of the demand curve. When
demand for a good is more elastic (price sensitive), the demand curve will be more horizontal.
When demand for a good is more inelastic (price insensitive), the demand curve will be more
vertical.
We expect the demand for preventive care (like the flu vaccine) to be ______ than the demand
for emergency room care. more elastic (more price sensitive)
(Preventive care refers to care taken to prevent future diseases rather than to treat current
ones. Preventive care is rarely urgent. In addition, the benefits of preventive care can be
difficult to measure: if you had the flu vaccine this year but did not catch the flu, it is impossible
to tell if it was the shot or assiduous hand washing that spared you.)
Assume that the demand for MRI scans is less elastic than the demand for Band-Aids. If (in the
market graph below) the demand for MRI scans is represented by demand curve D2, the
demand for Band-Aids is best represented by ______. Demand Curve 1
(Because demand for MRI scans is less elastic than the demand for Band-Aids, we expect the
demand curve for MRI scans (D2) to be more vertical than the demand curve for Band-Aids.
Therefore, the demand for Band-Aids is best represented by demand curve D1.)
Using results from the RAND Health Insurance Experiment (below), calculate the price elasticity
of demand for outpatient care. -0.17
Using the Midpoint Method...
GUARANTEED SUCCESS
The economics of health and health care is different from the economics at work in other,
smaller markets because ______. demand for healthcare is uncertain, health insurance is
very common, health is contagious
Economics is the study of the allocation of _____ to satisfy ______. limited resources,
unlimited wants
Based on Robinson Crusoe's PPF (below), the combination of goods (30 birds, 80 crabs) is
______. unattainable (because this combination of crabs and birds lays beyond the frontier)
Which of the following statements about indifference curves is (are) FALSE? A set of
Indifference curves shows the maximum possible output combinations of two goods or services
an economy can achieve when all resources are fully and efficiently employed.
(Indifference curves ACTUALLY show consumer preferences, identifying every possible
combination of goods that give the consumer the same amount of satisfaction.)
Based on the production possibilities frontier (PPF) and indifference curves below, Rob's
optimal combination of goods is ______. 15 birds and 17 crabs!
The optimal combination of birds and crabs is identified at the point where Rob's PPF is tangent
to (touching but not intersection) one of his indifference curves.
The terms "demand" and "supply" refer to the behavior of people as they interact with one
another in a market: _______ represents the behavior of buyers and _____ represents the
behavior of sellers DEMAND=BUYERS
SUPPLY=SELLERS
Summers in Columbia are (famously?) HOT. During a heat wave, we expect that the demand for
lemonade will ______. increase aka the demand curve will shift OUTWARD
,Peanut butter and Jelly are typically consumed ______ and as such are though of as ______
goods. together; complement
A peanut shortage causes the price of peanuts - along with the price of peanut butter - to
increase by 40%. As a result, we expect demand for jelly to ______ . decrease aka the
demand curve will shift INWARD (this is because they are complement goods, so their demand
patterns normally follow eachother)
Producer surplus is the difference between a seller's cost to produce a good and the amount a
seller is actually paid for it (market price) and is represented by the area ______. ABOVE the
supply curve and BELOW the market price
When the price of fresh tomatoes decreases by 10%, the quantity demanded of fresh tomatoes
increases by 46%. Calculate the price elasticity of demand for fresh tomatoes. -4.6
% change in quantity demanded / % change in price
(the price elasticity of demand will always be negative)
The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
All else equal, how does the heat wave affect the equilibrium price and quantity of lemonade?
Both equilibrium price and equilibrium quantity will increase
(The July heat wave leads to an increase in the demand for lemonade (demand shifter:
CONSUMER TASTES).
The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to
$0.99/lb. How will the changing market conditions affect the EQUILIBRIUM QUANTITY of
lemonade? Equilibrium quantity will increase
, The market for lemonade is initially in equilibrium. Temperatures soar during the month of July.
At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to
$0.99/lb. How will the changing market conditions affect the EQUILIBRIUM PRICE of lemonade?
The change in equilibrium price is ambiguous (we don't have enough information to be
certain)
The demand for wifi-enabled robot vacuums is more elastic than the demand for lifesaving
epinephrine. In the figure below, the market for epinephrine is best represented by the graph
on the ______ while the market for iRobot vacuums is best represented by the graph on the
______. left; right
BECAUSE the price elasticity of demand is related to the slope of the demand curve. When
demand for a good is more elastic (price sensitive), the demand curve will be more horizontal.
When demand for a good is more inelastic (price insensitive), the demand curve will be more
vertical.
We expect the demand for preventive care (like the flu vaccine) to be ______ than the demand
for emergency room care. more elastic (more price sensitive)
(Preventive care refers to care taken to prevent future diseases rather than to treat current
ones. Preventive care is rarely urgent. In addition, the benefits of preventive care can be
difficult to measure: if you had the flu vaccine this year but did not catch the flu, it is impossible
to tell if it was the shot or assiduous hand washing that spared you.)
Assume that the demand for MRI scans is less elastic than the demand for Band-Aids. If (in the
market graph below) the demand for MRI scans is represented by demand curve D2, the
demand for Band-Aids is best represented by ______. Demand Curve 1
(Because demand for MRI scans is less elastic than the demand for Band-Aids, we expect the
demand curve for MRI scans (D2) to be more vertical than the demand curve for Band-Aids.
Therefore, the demand for Band-Aids is best represented by demand curve D1.)
Using results from the RAND Health Insurance Experiment (below), calculate the price elasticity
of demand for outpatient care. -0.17
Using the Midpoint Method...
