1. According to a WSJ article, in Britain, drug companies are paying for nurses to study patient charts to identify people with chronic illnesses. "The nurses then recommend which patients should be called in for a check-up and perhaps prescribe new treatment. The work is part of what the industry calls "disease management programs," which the companies say improve care for people with illnesses like diabetes, asthma, or heart disease." Source: Jeanne Whalen, "Drug Makers Finance Nurses for U.K. Doctors." Wall Street Journal, 30 May 2007, Page B1. Which of the following best explains the actions of the drug companies? Select one:
a. Drug companies see this program as a way of educating patients about the various drug choices available to them
b. The companies see this program as a way to market their own products
c. The companies are committed to improving patient care in Britain
d. The companies are doing their part to ease the health care crisis in Britain
Ā
2. According to the economic way of thinking, Select one:
a. The value of a good is determined by the cost of the resources used to produce that good
b. A nation's wealth can be increased by shifting the production possibilities frontier inward.
c. Innovation makes it possible to produce good without giving up the production of another good
d. Costs are incurred when scarce resources are used to produce goods.
Ā
3. All of the statements are true about markets except Select one:
a. Markets excel at wealth creation because they often provide incentives for self-interested individuals to take socially beneficial actions
b. Markets function even without an administrator to coordinate the consumption and production plans of buyers and suppliers, respectively
c. The most equitable way to distribute goods and services is through markets
d. Markets are generally an efficient way to facilitate the exchange of goods, services, and resources
Ā
4. An institutional arrangement that provides people with opportunities and procedures for exchanging goods, services, and resources is called: Select one:
a. Barter
b. A social economy
c. Traded.
d. A market
5. Concerned that California's high-occupancy vehicle (HOV) lanes were not operating at full capacity and therefore not easing congestion as much as they could. In 2006, California lawmakers authorized the state's Department of Motor Vehicles to distribute 85,000 stickers to owners of gasoline-electric hybrid cars. Which of the following are the consequences of this policy?
(i) The stickers increased the demand for hybrid vehicles that qualified for stickers. (ii) The price of hybrid vehicles increased. (iii) The HOV lanes became clogged with hybrid vehicles which further aggravated congestion. Select one:
a. (i) and (ii) only b. (i), (ii) and (iii) c. (ii) and (iii) only d. (i) only
6. Consider the following policy: To make sure that poor people receive emergency treatment, the U.S. government forces emergency rooms to offer free care to poor patients. Which of the following is a consequence of this policy? Select one:
a. Hospitals in poor neighborhoods are likely to close their emergency rooms because of the high cost of providing free treatment to poor patients
b. Hospitals will have to offer higher salaries to doctors and nurses to induce them to work in poor neighborhoods
c. More hospitals are likely to open emergency care facilities in poor neighborhoods because of increased demand
d. The wait time in emergency rooms will fall.
7. Consider the following three statements: (i) The slump in the housing market has led to an increase in unemployment in the housing construction market. (ii) The Federal Reserve decided to keep interest rates unchanged, motivated by the slump in the housing market. (iii) The California Air Resources Board passed a regulation requiring that 10% of all large automobiles sold in California from 2008 onward be zero-emissions vehicles: cars powered by electricity or alternative fuels like hydrogen. Which of the statements is a macroeconomics issue? Select one:
a. (ii) only b. (i), (ii) and (iii) c. (i) and (ii) only d. (ii) and (iii) only
8. Consider the following three statements: (i) The slump in the housing market has led to an increase in unemployment in the housing construction market. (ii) The Federal Reserve decided to keep interest rates unchanged, motivated by the slump in the housing market. (iii) The California Air Resources Board passed a regulation requiring that 10% of all large automobiles sold in California from 2008 onward be zero-emissions vehicles: cars powered by electricity or alternative fuels like hydrogen. Which of the statements is largely a microeconomics issue? Select one:
a. (i) and (iii) only b. None of the above statements is a microeconomics issue c. (iii) only d. (i) only
Ā
9. Consider the following two medical procedures for a particular chronic illness. Procedure X has a very high patient survival rate, but patients are likely to suffer significant brain damage that greatly diminishes one's quality of life. Procedure Y has a much lower survival rate, but if a patient survives she is able to lead a full and normal life. If surgeons are compensated only if their patients survive, how will this policy affect the treatment for this illness?
Select one:
a. More of procedure X will be performed although patients are likely to suffer significant brain damage
b. Surgeons have no incentive to treat this illness
c. More of procedure Y will be performed because patients will able to lead full and normal lives
d. Patients have no incentive to seek treatment for this illness
10. Daikin, Possner, and Zoe are discussing what it means to say that people respond to incentives. Here is an extract from their conversation. Daikin: It means that people are required to behave in a cooperative fashion so that the citizens of a nation can coexist peacefully. Possner: It means that people act in ways that society approves. No rational person will do business with immoral characters. Zoe: It means that people undertake certain actions if they know that doing so will result in some form of material reward that they will not otherwise receive. Whose view accords with the economic way of thinking? Select one:
a. Only the views of Daikin and Zoe exhibit the economic way of thinking.
b. Possner's view is the only one that exhibits the economic way of thinking.
c. All three of their views exhibit an economic way of thinking.
d. Zoe's view is the only one that exhibits the economic way of thinking.
