Budget surplus is the amount by which the government’s receipts exceed expenditures during a specified period of time, usually a year.
Answer the following statement true (T) or false (F)
True
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Suppose a large firm allows its employees to choose whether to participate in its health insurance plan
The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible, and Plan II has a high monthly premium but a low deductible. Under which plan is adverse selection likely to be a bigger problem? A) Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. B) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect. C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. D) Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles.
If your guest is serious when he said that he just could not get enough of the lasagna you cooked and that the more he ate the more he wanted, you would conclude that the marginal utility of lasagna for him was
A. undefined. B. positive. C. zero. D. negative.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A. 120 LCD TVs that must be forgone to produce 20 additional OLED TVs. B. 30 LCD TVs that must be forgone to produce 40 additional OLED TVs. C. 20 OLED TVs that must be forgone to produce 30 additional LCD TVs. D. 40 OLED TVs that must be forgone to produce 120 additional LCD TVs.
To answer the next question, use the following graph showing the domestic demand and supply curves for a specific standardized product in a particular nation.
If the world price for this product is $0.50, this nation will experience a domestic
A. shortage of 160 units, which it will meet with 160 units of imports. B. surplus of 160 units, which it will export. C. shortage of 160 units, which will increase the domestic price to $1.60. D. surplus of 160 units, which will reduce the world price to $1.00.