CHAPTER 9: COMPARATIVE ADVANTAGE IN INTERNATIONAL TRADE, Exam 2 Microeconomics

a situation in which a country does not trade with other countries

the ratio at which a country can trade its exports for imports from other countries

FALSE

A.
Because production of most goods involves increasing opportunity costs.
B.
Because tastes for products differ.
C.
Because not all goods are traded internationally.
D.
All of the above.

D - ALL OF THE ABOVE

No, workers employed at companies that are less efficient than foreign companies will lose jobs.

FALSE

the reduction of costs resulting from increases in the size of an industry in a given area.

the relative abundance of capital and labor

higher, more

Which of the following is not a main source of comparative​ advantage?
A.
Climate and natural resources.
B.
Technology.
C.
Relative abundance of labor and capital.
D.
Internal economies of scale.
Your answer is correct.E.
External economies of scale.

D. INTERNAL ECONOMIES OF SCALE

A small country with fewer people

not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ.

A.
The use of quotas to protect domestic industries.
B.
The use of tariffs to protect domestic industries.
C.
The use of​ non-tariff barriers to protect domestic industries.
D.
All of the above.

D

A numerical limit on the quantity of a good that can be imported.

an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country

limit on the amount of a product entering a country

an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country

FALSE

FALSE

A.
Health and safety requirements
B.
Ad valorem tax on imports
Your answer is correct.C.
Embargos
D.
Quotas
E.
National security grounds

B

the process by which businesses or other organizations develop international influence or start operating on an international scale.

the use of trade barriers to shield domestic firms from foreign competition.

dumping

a product is exported for a lower price than it sells for on the home market.a

Measuring the effect of the sugar quota on the U.S. economy.Me

U.S. consumers buy
increasing
quantities of goods and services produced in other countries. At the same​ time, U.S. businesses sell
increasing
quantities of goods and services to consumers in other countries.

It shifts resources toward producing only those goods where it has a comparative​ advantage; No

the workers and companies in the industries that compete with the imports

may change as time passes and circumstances change.

Consumers benefit while competing firmsCo ​ lose; The true production costs are not easy for foreign governments to calculate.

A.
Some opponents are specifically against the globalization process that began in the 1980s and became widespread in the 1990s.
B.
Some opponents desire to erect trade barriers to protect domestic firms from foreign competition.
C.
Some critics of the WTO support globalization in principle but believe that the WTO favors the interests of the​ high-income countries at the expense of the​ low-income countries.
D.
All of the above.

goods and services, such as prescription drugs, consultation with doctors and surgeries that are intended to maintain or improve a person's health

provides tax credits to​ low-income individuals and small businesses with 25 or fewer employees.

Firms with more than 50 full
minus
−time employees must offer health insurance or pay a​ $3,000 fine to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace.

a contract under which buyer agrees to make payments or premiums in exchange for the provider's agreeing to pay some or all of the buyer's medical bills

the mortality ratio for cancer

a system under which doctors and hospitals receive a payment for each service they provide

a system such as the one canada in which the government providers health insurance to all of the country's residents

a health care system under which the government owns most of the hospitals and employes most of the doctors

a situation in which one party to an economic transaction has less information than the other party

the situation in which one party to a transction takes advantage of knowing more than the other party to the transaction

the action people take after they have entered into a transaction tha make the other party to the transaction worse off

a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them

health care reform legislation passed by congress and signed by president barack obama in 2010

changes in the market for health care that would make it more like the markets for other goods and services

d2 (positive side)

improving health care is part of improving living standard

it is provided like any other goods and services

was due to the change in lifestyle

it is a normal good

1) health care sellers are primarily private firms
2) consumers of health care make the decisions about how much they wish to consume

1) Life expectancy at birth has increased
2) The likelihood of death in the first months of life has fallen
3) Mortality rates have decreased.
4) Obesity has increased.

1) improving food distribution
2) improving sanitary conditions
3) accelerating medical research

increasing the​ country's effective workforce

An expansion of the​ economy's productive capacity is represented graphically as an outward shift in the production possibilities frontier. Much like a technological​ advance, the public health movement in the United States in the late nineteenth and early twentieth centuries increased the​ country's productive​ capacity, doing so by increasing the size and effectiveness of the​ country's labor force.

The decline in height occurred because improvements in transportation and mobility brought people into greater contact with diseases

A.
Infant mortality has decreased.

B.
The average person has become taller.

C.
Life expectancy has more than doubled

A.
advances in medical equipment and prescription drugs

B.
better sanitation

C.
improvements in the distribution of food

Most people have private health insurance through​ employers, with the government also providing insurance to the​ poor, aged, and military veterans.

Has a system of universal health insurance under which every resident is required to either enroll in a​ non-profit health insurance society or in a government health insurance program

Has a ​single-payer health care system where the government provides national health insurance to all residents.

The government owns most hospitals and employs most​ doctors, so the health care system is referred to as socialized medicine.

any indicator of societal health

Compared with those of other​ high-income countries, health care outcomes in the United States are superior in some cases​ (e.g., mortality ratio for​ cancer, access to MRI units and CT​ scanners) and inferior in others​ (e.g., infant mortality and​ obesity).

A.
a lack of data consistency.

B.
distinguishing health care effectiveness from lifestyle choices.

C.
getting an accurate measurement of health care delivery.

D.
properly assessing consumer preferences

means there is no charge to the health care system user.

​No, because they pay for these services through their taxes.

there is no one statistic that measures outcomes like these.

has relevance because health care outcomes are affected by many different factors and can be difficult to measure.

To justify collecting data on how soon after surgery patients get back to​ work, governments would need a sufficient reason to justify the cost of doing so.

the benefit may be greater than the cost of gathering the data.

reduce human suffering.

may be measured by examining​ illness/disease mortality ratios

examining indicators of​ citizens' health and the cost of resources devoted to health care.

more efficient in some areas and less efficient in others.

fewer​ workers, because the outcomes will be realized with a lower​ cost, or there will be better outcomes for the same cost.

premium

​employer-provided insurance plans

.
Countries may have different lifestyle choices that affect health care outcomes apart from the effectiveness of the​ countries' health care system.

B.
Countries do not deliver health care services in the same way.

C.
Countries do not always collect health care related data in the same way.

The PPACA was enacted in 2010 to significantly reorganize the U.S. health care system.

1) requires every firm with more than 200 employees to offer health insurance
2) Expands eligibility for medicare and establishes an advisory board with the power to reduce Medicare payments if needed
3) increases taxes on workers with incomes above $200,000

U.S. spending on health care was less than 6 percent of GDP in​ 1965, but had risen to about 17.5 percent in​ 2011, and is projected to rise to about 19.5 percent in 2019.

B.
The development of advanced medical technology and new prescription drugs.

C.
A slow rate of growth of labor productivity in health care.

D.
Distorted economic incentives for consumers and suppliers of health care.

E.
An aging U.S. population.

B.
the reforms​ don't go far enough in emulating the Canadian and European health care systems.

C.
information problems and externalities in the market for health care will continue under ACA.

D.
the system under ACA will have administrative costs higher than if government involvement was greater.

A.
Costs will not be reduced nor will efficiency improve because ACA fails to inject sufficient competition into the health care market.

B.
The ACA makes the market for health care less like the markets for other goods and services.

C.
Under​ ACA, inaccurate signals will continue to be received by both consumers and suppliers.

A.
Low rates of productivity in the health care sector.

B.
The introduction of higher cost drugs and medical equipment.

C.
Excessive​ paperwork, duplication, and waste.

D.
Malpractice​ lawsuits, including the costs of unnecessary tests and procedures.

increase expenditures on health care because aging people require increasing levels of health care.

aimed at controlling the distribution of scarce resources

A.
health care consumers will become more knowledable about the effectiveness and value of health care services.

B.
beneficiaries will be more prudent when it comes to choosing which health care services to acquire.

C.
consumers will demand fewer health care services than they would if a third party pays most of the bill.

premium supports

Yes, since most​ observers/analysts see unrestrained growth in spending as having the potential to undermine the financial health and stability of the government.

as income per person​ increases, so does health care spending per person.

advances in medical technology allow better and less costly treatment of disease and cures for diseases that are now expensive to​ treat, so that expenditures on health care could decline as incomes rise.
This is the correct answer.

should not

A.
lack of attention to​ short-run financing considerations.

B.
failure to adequately assess the role of distorted price signals for buyers of health care.

C.
​de-emphasis of cost​ factors, particularly those related to technological change.

become less​ valuable, and firms would need to raise wages to compensate for this lost value to keep total compensation the same.

At the efficient level the marginal benefit to consumers from medical services would equal the marginal cost of producing the services and the equilibrium quantity would be at the efficient level Q1. In this​ equilibrium, the quantity of medical services produced increases to Q2​, which is beyond the efficient level. The marginal cost of producing these additional units is greater than the marginal benefit consumers receive from them.

the insurance company often covers the majority of the cost.

will hesitate to go to a doctor to avoid the cost outlay

the premiums increased along with the lower deductible.

worse off because the​ premium, and their share of the​ premium, would be higher.

consumers of health care have been directly paying for only a small fraction of the true cost of providing health care

Spending on health care as a percentage of GDP more than doubled between 1965 and 2015.

Advances in medical technology and new prescription drugs that have higher costs is one of the major reasons for rapid increases in health care spending in the United States.

The Patient Protection and Affordable Care Act

.
Every firm with more than 200 employees is required to offer health insurance to its employees.

B.
Insurance companies are required to participate in a​ high-risk pool that will insure individuals with​ pre-existing medical conditions.

C.
Each state will have an Affordable Insurance Exchange.

A.
This change would result in a reduction in​ employers' spending on health insurance policies for employees.

B.
This change would result in a reduction in health insurance premiums.

C.
This change would result in an increase in​ employees' out-of-pocket spending on health care.

buyers of health insurance policies always know more about the state of their health than do the insurance companies.

1) requiring policyholders to play a deductible
2) requiring applicants to submit medical records
3) limiting the coverage of pre-existing conditions

A.
interferes with the economic efficiency of a market equilibrium.

B.
refers to a benefit or cost of an economic activity that affects someone who is not directly associated with it.

C.
may require government intervention.

People receiving vaccinations against infectious diseases.
This is the correct answer.
B.
Individuals engaging in injurious or reckless lifestyle choices.

is that it undermines the ability of insurance to provide the benefit of sharing risk.

B.
It provides a means of spreading the risk of bad outcomes.
This is the correct answer.
C.
It is a transfer program.

Disagree. Moral hazard becomes a problem after one purchases insurance. In this​ case, the reluctance of​ young, healthy adults to purchase insurance in the first place leads to an adverse selection problem

Adverse selection because the​ husband's secret alcoholism comes out after the wedding. Moral hazard because a spouse lets their appearance go after marriage

to the change in behavior after a transaction that is to the detriment of another. For​ example, a spouse letting their appearance go once they are off the dating market.

to making a bad choice because of not having full information before entering into a transaction. For​ example, a​ husband's secret alcoholism that only comes out after the wedding.

prevalence of patient health insurance in the United States that results in the​ principal-agent problem.

health care providers are paid for each service they render.
Because their insurance covers most or all of the cost of unnecessary​ procedures, patients are more likely to accept them than if they had to pay the full cost from their own funds. The​ pay-for-service aspect of health insurance worsens the​ principal-agent problem since health care providers are paid for each service they render.

Doctors and other health professionals may order the tests and procedures as a means of​ revenue-enhancement for themselves and their practices. The motivation may be particularly strong when they know that someone other than their patients will be picking up the tab.

Because healthy people perceive little risk of becoming​ sick, they anticipate having small or negligible medical bills and hence see little benefit from purchasing health insurance.

Since all individuals face some risk of​ sickness, all can benefit from the purchase of health insurance. The trick is to establish premiums based on each​ individual's inherent risk. The more that premiums are tailored to​ individuals, the more likely that individuals will buy insurance before the point of need.​ Low-risk individuals pay low​ premiums, high-risk individuals pay high premiums.

When healthy​ (low-risk) individuals do not purchase health​ insurance, a problem arises for the insurance system since insurance premiums become excessively​ high, the adverse selection problem is​ accentuated, and losses are inflicted upon insurers.

provide a subsidy to older sicker people.

A.
Health care should be supplied by the government because it generates positive externalities.

B.
Health care should not be supplied by the government because the private market preserves incentives to improve health care with innovation and medical technology.

Adverse selection is the situation in which one party to an economic transaction takes advantage of knowing more than the other party to the transaction.

moral hazard

Doctors pursuing their own interests rather than the interests of their patients.

Limiting insurance coverage on​ pre-existing conditions is an example of a way in which health insurance companies have dealt with the problem of adverse selection.

positive externality

True

qualify as public good under the usual definition

both non-rival and non-excludable

more than one sixth

: Because of switching costs, the technology that was first available may have advantages over better technologies that were developed later. In other words, the path along which the economy has developed in the past is important.