HEALTH ECONOMICS EXAM 1 PRACTICE QUESTIONS AND
ANSWERS | 2026 UPDATE | VERIFIED 100% CORRECT.
Economics is the study of the allocation of ___ to satisfy ___. Answer - limited
resources; unlimited wants
Which of the following statements about indifference curves is (are) false?
a.) 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
b.) when comparing bundles of goods that lie on the same indifference curve
we say the consumer has no preference for one over another
c.) Typical indifference curves are downward sloping and bowed toward the
origin
d.) a set of indifference curves can be used to summarize and represent
consumer preferences Answer - a set of indifference curves shows the
maximum possible output combinations of two goods or services an economy
can achieve when all resources
What does the production possibilites frontier (PPF) show? Answer - the
maximum possible output combinations of two goods or services an economy
can achieve when all resources are fully and efficiently employed
What are indifference curves? Answer - represent consumer preferences,
which connects every possible combination of goods that give the consumer
the same amount of satisfaction
, Based on a PPF and indifference curves, how do you see the optimal
combination of goods? Answer - When PPF is tangent to (touching but not
intersection) one of his indifference curves
The economics of health and health care is different from the economics at
work in other, smaller markets because? Answer - health insurance is
ubiquitous (very common), the demand for health care is highly uncertain, and
health is contagious
___ represents the behavior of buyers whereas ___ represents the behavior of
sellers. Answer - demand; supply
Summers in Columbia are HOT. During a heat wave, we except that the demand
for lemonade will ___. Answer - increase (the demand curve will shift outward)
Peanut butter and Jelly are typically consumer ___ and as such are thought of
as ___ goods Answer - 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 ___.
Answer - decrease (the demand curve will shift inward)
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___ Answer - above the supply curve and below market price
When the price of tomatoes decreases by 10%, the quantity demanded of fresh
tomatoes increases by 46%. Calculate the price elasticity of demand for
tomatoes. Answer - -4.6
ANSWERS | 2026 UPDATE | VERIFIED 100% CORRECT.
Economics is the study of the allocation of ___ to satisfy ___. Answer - limited
resources; unlimited wants
Which of the following statements about indifference curves is (are) false?
a.) 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
b.) when comparing bundles of goods that lie on the same indifference curve
we say the consumer has no preference for one over another
c.) Typical indifference curves are downward sloping and bowed toward the
origin
d.) a set of indifference curves can be used to summarize and represent
consumer preferences Answer - a set of indifference curves shows the
maximum possible output combinations of two goods or services an economy
can achieve when all resources
What does the production possibilites frontier (PPF) show? Answer - the
maximum possible output combinations of two goods or services an economy
can achieve when all resources are fully and efficiently employed
What are indifference curves? Answer - represent consumer preferences,
which connects every possible combination of goods that give the consumer
the same amount of satisfaction
, Based on a PPF and indifference curves, how do you see the optimal
combination of goods? Answer - When PPF is tangent to (touching but not
intersection) one of his indifference curves
The economics of health and health care is different from the economics at
work in other, smaller markets because? Answer - health insurance is
ubiquitous (very common), the demand for health care is highly uncertain, and
health is contagious
___ represents the behavior of buyers whereas ___ represents the behavior of
sellers. Answer - demand; supply
Summers in Columbia are HOT. During a heat wave, we except that the demand
for lemonade will ___. Answer - increase (the demand curve will shift outward)
Peanut butter and Jelly are typically consumer ___ and as such are thought of
as ___ goods Answer - 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 ___.
Answer - decrease (the demand curve will shift inward)
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___ Answer - above the supply curve and below market price
When the price of tomatoes decreases by 10%, the quantity demanded of fresh
tomatoes increases by 46%. Calculate the price elasticity of demand for
tomatoes. Answer - -4.6
