Figure 14.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. If $Y is the price the insurance company would charge if it expected 40% of its customers to be high-cost, the price it would charge if it expected 50% of its customers to be high-cost would be:
A. greater than $Y.
B. less than $Y.
C. equal to $Y.
D. 50% of $Y.
Answer: A
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Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one of the tickets is $20
A) only Violet and Walter will buy tickets. B) everyone will buy a ticket except for Zachary. C) the total consumer surplus from the purchase of tickets will be $122. D) Xavier's consumer surplus is $50.
An efficient tax is
A) a tax that raises a maximum amount of revenue. B) a tax that imposes a small excess burden relative to the tax revenue that it raises. C) a tax that imposes an equal tax burden on buyers and sellers. D) a tax that is used to fund research and development of new technology.
"3-D printers" can reduce the cost of producing stuff because they:
A. Eliminate massive factory costs B. Reduce transportation costs significantly C. Make use of low-cost materials and low-energy requirements D. Exploit huge economies of scale in production
A subgame is a simultaneous game embedded in a sequential game
Indicate whether the statement is true or false