Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to expenditures by consumers in this market if a $2 co-pay is established compared to a free-market equilibrium?
A. Expenditures rise by $90
B. Expenditures remain at $150
C. Expenditures fall by $120
D. Expenditures fall by $30
Answer: D
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Refer to the accompanying figure. Moving from demand curve D1 to demand curve D2 could be caused by a(n):
A. decrease in the product's expected future price. B. increase in the price of a complement. C. increase in the price of a close substitute. D. increase in quantity supplied.
In case of endogenous sample selection, OLS is unbiased but consistent.
Answer the following statement true (T) or false (F)
The following simultaneous equations describe the demand and supply for a particular good in a competitive market.
Qi= 
1Pi+ 
1zi1 + ui1
Qi= 2Pi+ 2zi2 + ui2
Which of the following are the endogenous variables in this model?
A. Pi,zi1, and zi2
B. Pi and Qi
C. zi1, and zi2
D. ui1 and ui2
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases. B. initially increases, then decreases. C. decreases. D. remains constant.