If the Chinese constructed their national income accounts the way we do in the United States, then it would not include
a. compensation of employees of the Chinese government
b. rent earned by Chinese private landowners
c. corporate profit earned by the China Energy Corporation
d. the purchase of housing in the Chinese capital, Beijing
e. royalties earned by a Chinese poet on her new publication The East Is Red
D
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An optimizing consumer makes her purchase decisions based on:
A) the total benefits at various levels of consumption. B) benefits per dollar spent at the margin. C) the total benefits per dollar spent at various levels of consumption. D) the benefits from the first dollar spent on consumption.
Use the above figure. Which graph depicts an inferior good?
A) A B) B C) C D) D
The basic purpose of economic models is to:
a. construct simplifying assumptions about the real world. b. explain reality in all its complexity. c. construct situations where controlled experiments can be carried out. d. provide explanations for, and predictions of the relationship between variables.
As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?
a. Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising. b. No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result. c. Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party. d. No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels.