MHA 710 - Healthcare Economics -
Exam 1 (Part 1 - Ch. 1 & 2)
Economics is best defined as the study of how to run a business most profitably. True or
False. - CORRECT ANSWER-False
Exhaust from a factory that increases health risks for people living near the factory is an
example of an externality. True or False. - CORRECT ANSWER-True
In 2008 and 2009, the U.S. economy experienced a deep economic downturn. If there is
a short-run trade-off between inflation and unemployment, to combat the high
unemployment, President Obama should have pursued an inflationary policy such as a
stimulus package of reduced taxes and increased government spending. True or False.
- CORRECT ANSWER-True
A society faces many decisions, but a household does not. True or False. - CORRECT
ANSWER-False
Public policies aimed at increasing the size of the economic pie also lead to a higher
degree of equality. True or False. - CORRECT ANSWER-False
You can stay home and study to do well on your exam or you can go to the movies with
your friends, but not both. This example illustrates:
A. Scarcity and tradeoffs
B. Scarcity but not tradeoffs
C. Tradeoffs but not scarcity
D. Neither tradeoffs nor scarcity - CORRECT ANSWER-A. Scarcity and tradeoffs
Your opportunity cost of going to a Maroon 5 concert during your Spring Break is:
A. Zero, because Maroon 5 is your favorite
B. The price of the concert ticket
C. The price of the concert ticket plus the cost of any beverages you buy at the concert
D. The price of the concert ticket, plus the cost of any beverages you buy at the concert,
and the value of your time - CORRECT ANSWER-D. The price of the concert ticket,
plus the cost of any beverages you buy at the concert, and the value of your time
Certain employees are eligible for unemployment compensation if they lose their jobs
through no fault of their own. If Jim, a factory worker, will receive compensation of half
his regular pay for 52 weeks while he looks for a job, then:
, A. The unemployment compensation most likely raises Jim's incentive to save while he
is working. Unemployment compensation most likely increases Jim's efforts to find a
new job.
B. The unemployment compensation most likely raises Jim's incentive to save while he
is working. Unemployment compensation most likely decreases Jim's efforts to find a
new job.
C. The unemployment compensation most likely lowers Jim's incentive to save while he
is working. Unemployment compensation most likely increases Jim's efforts to find a
new job.
D. The unemployment compensation most likely lowers Jim's incentive to save while he
is working. Unemployment compensation most likely decreases Jim's efforts -
CORRECT ANSWER-D. The unemployment compensation most likely lowers Jim's
incentive to save while he is working. Unemployment compensation most likely
decreases Jim's efforts to find a new job.
Micah has spent $30 for a taxi ride to attend a Colts game. When he arrives at the
stadium, he discovers that he left his ticket at home. He doesn't have time to return
home to get it. He paid $60 for his ticket, but can buy another one for $80. In deciding
whether he should buy another ticket Micah should compare the value he places on
attending the game to:
A. $30
B. $80
C. $90
D. $170 - CORRECT ANSWER-B. $80
Trade between countries tends to:
A. Reduce specialization and make everyone better off
B. Reduce specialization and make everyone worse off
C. Raise specialization and make everyone better off
D. Raise specialization but make everyone worse off - CORRECT ANSWER-C. Raise
specialization and make everyone better off
Which of the following is the primary determinant of the standard of living?
A. Labor unions
B. Productivity
C. The amount of labor
D. Competition from foreign countries - CORRECT ANSWER-B. Productivity
As the manager at the local Save-a-lot, you are thinking of adding one more cashier that
would increase sales revenues by $400 per week. What is the most you can pay this
new cashier and why?
A. $200 per week, so the store makes a profit of $200.
B. $400 per week, because that is the marginal benefit of hiring the new cashier.
C. $500 per week, because you are fair and pay more than the minimum wage.
D. I don't have enough information to make this decision. - CORRECT ANSWER-B.
$400 per week, because that is the marginal benefit of hiring the new cashier.
Exam 1 (Part 1 - Ch. 1 & 2)
Economics is best defined as the study of how to run a business most profitably. True or
False. - CORRECT ANSWER-False
Exhaust from a factory that increases health risks for people living near the factory is an
example of an externality. True or False. - CORRECT ANSWER-True
In 2008 and 2009, the U.S. economy experienced a deep economic downturn. If there is
a short-run trade-off between inflation and unemployment, to combat the high
unemployment, President Obama should have pursued an inflationary policy such as a
stimulus package of reduced taxes and increased government spending. True or False.
- CORRECT ANSWER-True
A society faces many decisions, but a household does not. True or False. - CORRECT
ANSWER-False
Public policies aimed at increasing the size of the economic pie also lead to a higher
degree of equality. True or False. - CORRECT ANSWER-False
You can stay home and study to do well on your exam or you can go to the movies with
your friends, but not both. This example illustrates:
A. Scarcity and tradeoffs
B. Scarcity but not tradeoffs
C. Tradeoffs but not scarcity
D. Neither tradeoffs nor scarcity - CORRECT ANSWER-A. Scarcity and tradeoffs
Your opportunity cost of going to a Maroon 5 concert during your Spring Break is:
A. Zero, because Maroon 5 is your favorite
B. The price of the concert ticket
C. The price of the concert ticket plus the cost of any beverages you buy at the concert
D. The price of the concert ticket, plus the cost of any beverages you buy at the concert,
and the value of your time - CORRECT ANSWER-D. The price of the concert ticket,
plus the cost of any beverages you buy at the concert, and the value of your time
Certain employees are eligible for unemployment compensation if they lose their jobs
through no fault of their own. If Jim, a factory worker, will receive compensation of half
his regular pay for 52 weeks while he looks for a job, then:
, A. The unemployment compensation most likely raises Jim's incentive to save while he
is working. Unemployment compensation most likely increases Jim's efforts to find a
new job.
B. The unemployment compensation most likely raises Jim's incentive to save while he
is working. Unemployment compensation most likely decreases Jim's efforts to find a
new job.
C. The unemployment compensation most likely lowers Jim's incentive to save while he
is working. Unemployment compensation most likely increases Jim's efforts to find a
new job.
D. The unemployment compensation most likely lowers Jim's incentive to save while he
is working. Unemployment compensation most likely decreases Jim's efforts -
CORRECT ANSWER-D. The unemployment compensation most likely lowers Jim's
incentive to save while he is working. Unemployment compensation most likely
decreases Jim's efforts to find a new job.
Micah has spent $30 for a taxi ride to attend a Colts game. When he arrives at the
stadium, he discovers that he left his ticket at home. He doesn't have time to return
home to get it. He paid $60 for his ticket, but can buy another one for $80. In deciding
whether he should buy another ticket Micah should compare the value he places on
attending the game to:
A. $30
B. $80
C. $90
D. $170 - CORRECT ANSWER-B. $80
Trade between countries tends to:
A. Reduce specialization and make everyone better off
B. Reduce specialization and make everyone worse off
C. Raise specialization and make everyone better off
D. Raise specialization but make everyone worse off - CORRECT ANSWER-C. Raise
specialization and make everyone better off
Which of the following is the primary determinant of the standard of living?
A. Labor unions
B. Productivity
C. The amount of labor
D. Competition from foreign countries - CORRECT ANSWER-B. Productivity
As the manager at the local Save-a-lot, you are thinking of adding one more cashier that
would increase sales revenues by $400 per week. What is the most you can pay this
new cashier and why?
A. $200 per week, so the store makes a profit of $200.
B. $400 per week, because that is the marginal benefit of hiring the new cashier.
C. $500 per week, because you are fair and pay more than the minimum wage.
D. I don't have enough information to make this decision. - CORRECT ANSWER-B.
$400 per week, because that is the marginal benefit of hiring the new cashier.
