Question 20 (5 points) <br/> <br/> <br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/><br/>Which

of the following is an INCORRECT statement regarding “substitute” goods?
Question 20 options:

a)
An increase in the price of the substitute good, reduces the demand for the good you are focusing on.

b)
The availability of a “substitute” for a good impacts the price sensitivity or elasticity of the good.

c)
Demand for a product will be more sensitive to price changes if there are a large number of substitutes for the product.

d)
A “substitute” is a good used in lieu of another good that functions similarly or provides the same service.

Question 19 (5 points)

Saved

Which of the following will lead to a decrease in the demand for health insurance?
Question 19 options:

a)
An increase in income

b)
An increase in premiums

c)
An increase in risk aversion

d)
An increase in the expected value of an event occurring

Question 18 (5 points)

Which of the following is a CORRECT statement regarding the marginal principal?
Question 18 options:

Continue an activity as long as the marginal benefit equals the marginal cost

Continue an activity as long as the benefit exceeds the cost

Continue an activity as long as the total benefit equals the total cost

Continue an activity as long as the marginal benefit exceeds the marginal cost

Question 17 (5 points)

Which of the following is a FALSE statement regarding adverse selection?
Question 17 options:

The smaller the covered population, the lower the impact of adverse selection on premiums.

Adverse selection arises because of “asymmetric information”

Community rating is a method insurers use to mitigate adverse selection

Insurers in the individual market used medical underwriting to mitigate adverse selection.

Question 16 (5 points)

Saved

You have a part-time job at the library that pays $10 per hour, 3 hours per day on Saturdays and Sundays. Some friends want you to join them on a weekend ski trip leaving Friday night and returning Monday morning. They estimate your share of the gas, motel, lift tickets, and other expenses to be around $30. What is your opportunity cost of taking the ski trip?
Question 16 options:

$30

$60

$90

$120

Question 15 (5 points)

Saved

Which of the following correctly identifies the price at which a firm should shut-down?
Question 15 options:

Price is equal to the average variable cost

Price is equal to marginal cost

Price is less than total cost

Price is less than average variable cost

Which of the following statements correctly identifies increasing returns to production?
Question 14 options:

a)
As firms add workers, output declines

b)
Marginal product is greater than average product

c)
Marginal product equals average product

d)
As firms increase workers, output increases at a diminishing rate
An increase in consumer incomes will:
Question 7 options:

Increase the demand for an inferior good

Increase the supply of an inferior good

Increase the demand for a normal good

Decrease the supply of a normal good