The Harvard experiment found the answer to "Why is private health insurance so expensive?" is:
A) adverse selection - healthier patients don't want expensive coverage.
B) adverse selection - poorer patients want more free health care.
C) adverse selection - Harvard employees wanted more extensive coverage.
D) adverse selection - health care subsidies resulted in unhealthy patients wanting more coverage.
A
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Assuming that a society always operates on its production possibilities curve, an inward shift of the curve implies that
A. the country's capacity to produce is fixed. B. the country is not using its resources efficiently. C. the country's capacity to produce has contracted. D. All of the choices are true.
The advent of DVDs has virtually demolished the market for videocassettes. This is an example of:
A. creative destruction. B. derived demand. C. capital accumulation. D. the difference between normal and economic profits.
Answer the following statement(s) true (T) or false (F)
1. In both the short-run and the long-run, a monopoly is guaranteed to earn positive profits. 2. An excise tax will increase the deadweight loss due to monopoly, but an excise subsidy can reduce the deadweight loss. 3. An unregulated, profit maximizing monopoly will never set a price where demand is inelastic. 4. The large increase in the price of oil and in the total revenues and profits of the US oil industry in the 1990's are evidence that it was exercising monopoly power. 5. A monopoly's supply curve is the portion of its marginal cost curve that lies above its average variable cost curve.
Monopolistically competitive firms engage in advertising to increase market share and make demand more inelastic
Indicate whether the statement is true or false