Refer to the figure below. What would be the impact on the three categories of people if they were given the value of medical insurance in cash instead of having it provided?
In general, we cannot answer this question. In panel A we could expect that this person would
choose to have more insurance. In panel B it is possible for this person to continue with the
same level of coverage but have more of all other goods. In addition, this person could
actually choose to have less insurance. The same thing is possible for the individual in panel
C.
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Explain what an entrepreneur is and its function
What will be an ideal response?
The Lorenz curve is criticized for all of the following EXCEPT
A) that it excludes transfers-in-kind income. B) that it does not account for the size differences of households. C) that it does not account for age differences of households. D) that it does not account for the impact of trade on the standard of living.
Which of the following is true when regulators require a natural monopolist to set price equal to marginal cost?
a. This policy results in a less than socially optimal allocation of resources. b. The marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit. c. The monopolist will face recurring losses unless a subsidy is provided. d. The monopolist will earn a normal profit. e. The monopolist will earn more than a fair return.
An increase in net wealth will: a. increase consumption and saving at each level of income
b. increase saving and decrease consumption at each level of income. c. decrease consumption and saving at each level of income. d. increase consumption and decrease saving at each level of income. e. have no effect on consumption because consumption is a function of income.