Article Summary. A growing number of U.S. citizens are going to other countries
for elective surgery procedures. Improved quality and significant cost savings
abroad have attracted an increasing number of what are being referred to as
American medical tourists, especially those who either do not have insurance or
whose insurance does not cover the desired procedure. As few as five years ago,
Americans tended to travel to countries such as Thailand or Mexico for the
procedures, but many are now choosing to go to Europe, where governments and
hospitals are now publicizing these services. Many of the procedures being done
overseas are joint replacement, and partly in response to the number of patients
going abroad for these procedures, programs are being developed to reduce the
cost of these surgeries in the United States.
Source: Elizabeth Rosenthal, “The Growing Popularity of Having Surgery
Overseas,” New York Times, August 6, 2013.
If more European governments and hospitals begin to offer and publicize their services
to American medical tourists and, due to the growing number of aging baby boomers,
more Americans desire joint-replacement surgery , what will happen in the market for
joint-replacement surgery as a result of these two factors?
A) Demand will increase, but these two factors will not shift the supply curve.
B) Supply will increase, but these two factors will not shift the demand curve.
C) Demand and supply will both increase.
D) Demand will increase and supply will decrease.
Which of the following displays rivalry and excludability in consumption?
A) public goods
B) private goods
C) quasi-public goods
D) common resources
What is a prisoner’s dilemma?
A) a game that involves no dominant strategies
B) a game in which prisoners are stumped because they cannot communicate with each
other
C) a game in which players act in rational, self-interested ways that leave everyone
worse off
D) a game in which players collude to outfox authorities
An inflation rate of 5% between 2013 and 2014 would be implied by a change in the
GDP deflator from ________ in 2013 to ________ in 2014.
A) 105; 115
B) 200; 205
C) 400; 420
D) 375; 390
Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP? C
= 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400 A) $4,333
B) $7,100
C) $8,778
D) $79,000
The market supply curve for labor is
A) derived from the market supply curve for the output produced with labor.
B) perfectly inelastic if leisure is an inferior good.
C) determined by adding up the quantity of labor supplied by each worker at each
wage, holding constant all other variables that affect the willingness of workers to
supply labor.
D) determined by adding up the wages each worker is willing to work for at a given
quantity supplied, holding constant all other variables that affect the willingness of
workers to supply labor.
Suppose the per-unit production cost of a book is $4.00 and the retail price is $32. If the
book publisher sells books to a bookstore at a 40 percent discount, what is the amount
of the publisher’s markup per book? Assume that bookstores sell books at the retail
price.
A) $12.80
B) $15.20
C) $19.20
D) $21.60
Opportunity cost is defined as
A) the benefit of an activity.
B) the monetary expense associated with an activity.
C) the highest valued alternative that must be given up to engage in an activity.
D) the total value of all alternatives that must be given up to engage in an activity.
If the best surgeon in town is also the best at cleaning swimming pools, then according
to economic reasoning, this person should
A) pursue the activity he enjoys more.
B) specialize in cleaning swimming pools because it is more labor-intensive.
C) split his time evenly between being a surgeon and cleaning swimming pools.
D) specialize in being a surgeon because its opportunity cost is lower.
Which of the following is the best example of a quota?
A) a subsidy from the U.S. government to domestic manufacturers of tires to enable
them to compete more effectively with foreign producers
B) a limit on the quantity of tires that can be imported from a foreign country
C) a 40% fee imposed on all imported tires
D) a tax placed on all tires sold in the domestic market to help offset the impact of lost
jobs in the domestic tire industry.
Sefronia and Bella share an apartment and they are deciding whether or not to purchase
a weekly housecleaning service. The value of the service to each of them is $50 and it
costs $80 to hire a housecleaner. Should they hire a housecleaner?
A) Yes, if each contributes $50, then each stands to gain a consumer surplus.
B) No, because each will wait for the other to hire the housecleaner.
C) Yes, but only if a housecleaner will accept $50 so that each can take turns to pay the
housecleaner.
D) No, because it will be XOAicult for them to agree on which housecleaning service
to use.
The parent company of Safelite AutoGlass, the nation’s largest installer of auto glass,
changed the system it used to pay its glass installers in the mid-1990s. How did Safelite
change its compensation system and what was the result?
A) Safelite ended its system of paying workers on the basis of how many windows they
repaired and replaced it with a system that paid workers hourly wages. As a result,
productivity and worker morale improved.
B) Safelite ended its system of paying workers hourly wages and replaced it with a
system that determined wages on the basis of how many windows were repaired. As a
result, productivity and worker morale suffered. Eventually, Safelite returned to its
previous compensation system.
C) The new system has not been in place long enough to determine whether it is an
improvement over the previous compensation system.
D) Safelite ended its system of paying workers hourly wages and replaced it with a
system that determined wages on the basis of how many windows were repaired. As a
result, productivity and worker morale improved.
An increase in expected inflation will
A) increase real wages.
B) decrease the natural rate of unemployment.
C) shift the long-run Phillips curve to the right.
D) None of the above is correct.
Which of the following can explain why some countries have not experienced relatively
high growth rates in real GDP per capita despite relatively low initial levels of real GDP
per capita?
A) Many of these developing countries do not have a functioning court system that can
enforce laws.
B) Countries that are relatively poor are more likely to experience wars and revolutions.
C) Countries that are relatively poor are likely to have a lower quality of health care.
D) all of the above
The larger the number of firms in an industry
A) the easier it is to implicitly collude to fix prices.
B) the more intense the rivalry among firms.
C) the greater the need for a price enforcement mechanism.
D) the larger the potential number of market segments.
In economics, the study of the decisions of firms in industries where the profits of each
firm depend on its interactions with other firms is called
A) decision theory.
B) game theory.
C) market structure analysis.
D) profit analysis.
Economists have shown that the burden of a tax is
A) greater on the buyer when the tax is collected from the buyer.
B) greater on the seller when the tax is collected from the seller.
C) greater on the buyer when the tax is collected from the seller and greater on the
seller when the tax is collected from the buyer.
D) the same whether the tax is collected from the buyer or the seller.