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Exam 4

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Question 1 (4 points)
Health-care expenditures per capita have risen since the mid 1960s in the United States. Which of the following is not a reason for the increase?
  1. People often perceive health care as a free good
  2. The demand for health care has risen
  3. The supply of health care has risen
  4. Technological change in health care has taken place
  5. The federal government has had such a small role in health care
Question 2 (4 points)
The goal of the social security system is to ensure that the elderly retire with
  1. a better lifestyle than they enjoyed when working
  2. the same lifestyle they enjoyed when working
  3. all health care needs met by the federal government
  4. a slightly reduced income level and a significantly earlier retirement
  5. a lifestyle that is above the poverty level
Question 3 (4 points)
The demand for a good or service rises if at every price people are willing and able to purchase more than they did previously. The reason the demand for health care has risen is
  1. that the price of health care has fallen due to technological change
  2. third party payment system has increased people's willingness to purchase more
  3. that the quality of health care has risen
  4. that the price of health care has fallen while the quality has risen
  5. third party payment system has increased people's ability to purchase more
Question 4 (4 points)
The labor market supply curve is
  1. downward sloping
  2. perfectly elastic
  3. upward sloping
  4. perfectly inelastic
  5. downward sloping at first and then bends backward
Question 5 (4 points)
Which of the following best explains the shape of the individual labor supply curve?
  1. The individual labor supply curve must be vertical since each person can work only eight hours per day
  2. The individual labor supply curve is exactly like any supply curve: it always has a positive slope
  3. The individual labor supply curve slopes downward at all wage rates, because as wages increase people are able to buy more leisure
  4. The individual labor supply curve must be horizontal because labor markets are assumed to be perfectly competitive
  5. The individual labor supply curve slopes upward at lower wage rates and then bends back at higher wage rates
Question 6 (4 points)
If people are separated into different jobs on the basis of sex, this is known as
  1. statistical discrimination
  2. occupational segregation
  3. employer prejudice
  4. worker prejudice
  5. crowding
Question 7 (4 points)
According to the Economic Insight in the text, it is a myth that what people put into the system is exactly what they get out. Why is this a myth?
  1. The system ensures that people won't profit from social security
  2. At least through 2003, retirees receive significantly more in benefits than what they ever pay into the system
  3. Retirees pay in current value dollars and don't receive an equivalent amount in future value dollars
  4. People never live long enough to collect all their benefits
  5. Retirees pay in over 40 years and collect benefits over 20
Question 8 (4 points)
Medicare's prospective payment system is an example of a
  1. price rationing system
  2. tariff
  3. price ceiling
  4. barrier to entry
  5. price floor
Question 9 (4 points)
The supply curve for medical care will shift to the left if
  1. resource prices are falling or if economies of scale are being experienced
  2. the cost of medical care is falling
  3. resource prices are falling or if diseconomies of scale are being experienced
  4. resource prices are rising or if economies of scale are being experienced
  5. resource prices are rising or if diseconomies of scale are being experienced
Question 10 (4 points)
Which of the following is not a trait commonly seen among those who fall below the poverty line?
  1. 4 or more years of college
  2. Lack of a job
  3. Being aged 16 and over
  4. Lack of education
  5. Being aged 65 and over
Question 11 (4 points)
Compensation vs Productivity
Suppose the figure above shows a comparison between workers' compensation and their productivity. At approximately what age does productivity peak and at what age do earnings peak?
  1. 35, 55
  2. 45, 45
  3. 45, 55
  4. 35, 65
  5. 55, 35
Question 12 (4 points)
If income was equally distributed, the Lorenz Curve would
  1. be a horizontal line
  2. be the same as the 45 degree line of equality
  3. be a vertical line
  4. be just one point on the diagram
  5. be the same as the 90 degree line of equality
Question 13 (4 points)
Which of the following is not an in-kind transfer?
  1. Medical services provided under Medicaid
  2. Legal aid for the poor
  3. School lunch programs
  4. Food stamps
  5. Social security retirement benefits
Question 14 (4 points)
Which of the following statements concerning poverty distribution is true?
  1. The poverty line is a fixed income level that's the same for all countries
  2. Poverty rates rise when per capita GDP increases
  3. Poverty rates increase with economic growth
  4. The incidence of poverty in less developed countries is smaller than in developed countries
  5. Poverty rates rise during periods of economic stagnation
Question 15 (4 points)
For economists, discrimination is difficult to rationalize because
  1. wages will not be allowed to fall below their natural equilibrium rate
  2. it is not costly to discriminate
  3. economists know that in the real world, personal prejudices do not exist
  4. in a freely functioning labor market, there is no such thing as discrimination
  5. it is costly to discriminate
Question 16 (4 points)
If each of the following jobs paid the same wage, which one would we expect most people to pick if given the choice?
  1. A job that requires little human capital but is dangerous
  2. A job that requires excellent skills and has a small amount of nonmonetary benefits
  3. A job with very poor working conditions
  4. A job that requires few skills and has a large amount of nonmonetary benefits
  5. A job that requires large amounts of human capital but is dangerous
Question 17 (4 points)
As the baby boomers come of retirement age, Social Security
  1. becomes a problem for society because social security payments are funded from current taxes and those taxes will be paid by a population that is larger than the baby boom population
  2. becomes a problem for society because social security payments are funded from current taxes and those taxes will force baby boomers to work longer leaving fewer jobs available for the younger workers
  3. becomes a problem for society because social security payments are funded from taxes that the baby boomers can not afford
  4. becomes a problem for society because the baby boomers want higher social security payments
  5. becomes a problem for society because social security payments are funded from current taxes and those taxes will be paid by a population that is smaller than the baby boom population
Question 18 (4 points)
According to the text, what makes health care different from any other good or service is
  1. the supply of health care does not slope up
  2. the demand curve for health care does not slope down
  3. people do not have to make choices when it comes to health care
  4. people feel like they have an inalienable right to health care
  5. there is no scarcity of health care
Question 19 (4 points)
Which of the following would not reduce the problem with the social security system?
  1. Privatizing the system by allowing individuals to decide how to invest their social security taxes
  2. Reducing the benefits paid the retirees
  3. Increasing the age one must be before one can receive retirement benefits
  4. Placing everyone in the Congressional Retirement Program
  5. Paying retirement benefits only to those without any other income
Question 20 (4 points)
Progressive Tax
Refer to the table above. The best example of a progressive tax is
  1. tax policy Delta
  2. tax policy Beta
  3. tax policy Gamma
  4. tax policy Alpha
  5. not described by the figures above
Question 21 (4 points)
The market system works to ensure that resources
  1. go to those who desire them the most, even if they cannot pay for them
  2. flow to their highest-valued uses
  3. are allocated in the fairest possible manner to members of society
  4. invariably end up going to their lowest-valued uses
  5. are allocated by government fiat
Question 22 (4 points)
One proposal for solving the social security problem is privatization. The countries who have privatized their social security systems have found
  1. that people use so many resources trying to make the correct investment that they lose their jobs
  2. that people are foolish with their investments
  3. that the returns people have received are more than what they would have received from the government
  4. that people find they do not have enough savings to retire
  5. that the returns people have received are less than what they would have received from the government
Question 23 (4 points)
Country A vs Country B
Refer to the figure above. In comparing Country A's income distribution with that of Country B, we can say that
  1. Country B has a substantially greater degree of income equality than Country A
  2. the absolute level of income in Country B must substantially exceed that of Country A
  3. Country B has a substantially greater degree of income inequality than Country A
  4. the absolute level of income in Country A must substantially exceed that of Country B
  5. since both curves are bowed in like fashion, no income inequality exists
Question 24 (4 points)
The concept of comparable worth
  1. has made hiring practices much simpler for employers
  2. is that pay ought to be determined by job characteristics rather than by supply and demand
  3. is easy to implement once a new worker has been hired
  4. is that pay ought to be determined by supply and demand rather than by job characteristics
  5. asserts that market-determined wages are the only appropriate way in which to allocate pay
Question 25 (4 points)
Which of the following explanations for the uneven distribution of income in the world has been argued by economists?
  1. Older countries tend to be richer
  2. People who live in colder countries tend to be more work oriented
  3. Poorer countries tend to have unfounded cultures
  4. The freer the economic and political system, the greater the rate of economic growth
  5. None of these
Question 26 (4 points)
HMOs and PPOs have come about because of the
  1. steady decrease in the number of hospital beds nationwide
  2. increasing shortage of physicians in certain key specialties
  3. perceived lack of quality care provided by many clinics
  4. increased costs of medical care
  5. erosion of standards formerly set by the federal government
Question 27 (4 points)
Supply and Demand of Labor
In the figure above, the initial labor supply is S 1 and the labor demand is D 1 . If the wage is $6, which of the following is correct?
  1. There is a shortage of 30 workers
  2. The market is in equilibrium
  3. The actual wage is above the equilibrium wage
  4. There is a shortage of 10 workers
  5. There is a shortage of 20 workers
Question 28 (4 points)
Workers allocate their time between work and leisure such that
  1. when 40 hours are worked, the rest of their time is spent on leisure activity
  2. when their fun is over, they will work
  3. the marginal benefit of an hour spent working will be greater than the marginal benefit of an hour spent on leisure activity
  4. the marginal benefit of an hour spent working will equal the marginal benefit of an hour spent on leisure activity
  5. the marginal benefit of an hour spent working will be smaller than the marginal benefit of an hour spent on leisure activity
Question 29 (4 points)
CEOs may be paid very high salaries regardless of their firm's performance
  1. because their salaries are set by a board comprised of their friends
  2. because of any or all of the other answers
  3. because their pay will raise the productivity of the firm
  4. because owners and managers are separated and owners have little control over the managers
  5. because the pay serves as an incentive to all employees
Question 30 (4 points)
The largest publicly sponsored health-care program is
  1. social security
  2. group care
  3. Medicaid
  4. Medicare
  5. Head Start
Question 31 (4 points)
In a market system, incomes are distributed according to the ownership of resources. Therefore, one of the consequences of a market system is that
  1. equality and efficiency are virtually guaranteed
  2. incomes are distributed equally
  3. even though incomes are distributed unequally, government intervention will always make the necessary adjustment
  4. jobs are distributed unfairly
  5. incomes are distributed unequally
Question 32 (4 points)
One unintended effect of the government welfare system is that it may
  1. improve the health of those living below the poverty line
  2. reduce income inequality
  3. create incentives to further one's education
  4. create disincentives to work
  5. reduce the number of people living below the poverty line
Question 33 (4 points)
Wage Differential
In the figure above, the reason for the wage differential could be the fact that
  1. market A consists of workers with more human capital
  2. market A is the market for a risky occupation
  3. market B consists of workers with less human capital
  4. market B is unskilled labor
  5. All of these
Question 34 (4 points)
The highest incidence of poverty by age occurs among those
  1. 65 years of age and over
  2. between 21 and 31 years of age
  3. between 41 and 61 years of age
  4. between 31 and 41 years of age
  5. under 21 years of age
Question 35 (4 points)
Unskilled workers as compared to skilled workers
  1. are in greater supply and have lower marginal productivity; for both these reasons they must expect a lower wage rate
  2. are discriminated against; this is the only reason they receive a lower wage
  3. are in smaller supply and have lower marginal productivity; for both these reasons they must expect a lower wage rate
  4. are in greater supply and have higher marginal productivity; for both these reasons they must expect a lower wage rate
  5. are in smaller supply and have higher marginal productivity; for both these reasons they must expect a lower wage rate
Question 36 (4 points)
In comparing income and wealth, we know that
  1. income is the stock of assets, while wealth is the flow of earnings that results from the stock of assets
  2. wealth cannot produce income except in the form of human capital
  3. wealth represents the flow of assets
  4. wealth is the stock of assets, while income is the flow of earnings that results from the stock of assets
  5. income represents the flow of assets
Question 37 (4 points)
A compensating wage differential is a wage difference
  1. that makes up for the high risk or poor working conditions of a job
  2. attributable to different demands for labor
  3. that results because of a monopsony
  4. that leads to more risks taken on the job
  5. due to discrimination
Question 38 (4 points)
A person will invest in human capital until
  1. the total cost of human capital is equal to the total benefit
  2. the marginal cost of human capital is equal to the marginal product of labor
  3. the marginal benefit of human capital is equal to the marginal cost
  4. the marginal benefit of human capital is zero
  5. the marginal benefit of human capital is equal to the marginal product of labor
Question 39 (4 points)
The most unequal distribution of income is found in
  1. less developed countries
  2. OPEC countries
  3. formerly communist countries
  4. developed countries
  5. Pacific Rim countries
Question 40 (4 points)
If the price level actually declined, the official poverty-line income would
  1. rise only if there was sufficient unemployment
  2. would decline by the amount of inflation
  3. decline by the amount of the price decline
  4. rise only by the inflation rate
  5. would remain at its last year's level
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Exam 4. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/introduction-to-microeconomics-1/exam4.htm. This work is licensed under a Creative Commons License Creative Commons License