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1. NHI would provide

1. NHI would provide universal health insurance. Supporters of NHI see health care as a fundamental right, rather than as a commodity to be rationed based on income. They see the lack of universal health insurance in the U.S. as a moral failure and believe that the U.S. should join other developed nations in providing universal health insurance. 2. NHI would enable better control over total health care spending by; a. lowering the cost of administration. The current health care system, with its variety of governmental health insurance programs and private health insurance programs, results in enormous administrative cost. A single-payer national health insurance could have much lower costs of administration. b. controlling inflation in the health care sector. The government could use its monopsony power as the single payer to negotiate lower prices for hospital care, physician services, prescription medicines, etc. c. setting overall limits on the amount of health care spending. Just as other types of government spending (e.g. national defense, public education) are limited to budgeted amounts, an overall limit on the amount of health care spending could be set. This would require difficult decision-making to determine the best use of the limited resources. Preventive medical care would be emphasized, since it would be in the best interest of the government to limit total health care spending over the life of each person. Those who oppose national health insurance assert that: 1. Health care cannot be considered a fundamental right. Given the basic economic problem of scarcity, health care must be rationed in some way, either on the basis of interactions in the marketplace or by governmental decision-making. The marketplace will do a better job of measuring marginal benefits and marginal costs than will a government bureau. 2. Competitive markets are the best way to control total health care spending because; a. administrative costs could best be lowered by a CDHC system, with most medical payments made directly by the consumer rather than by a third-party. b. competitive markets are the best way to set prices. The spiraling costs of health care are largely the result of the lack of competition and the prevalence of third-party payments. In parts of the health care market where competition is strong and third-party payments are uncommon (e.g. cosmetic surgery, LASIK eye surgery), real prices have been falling even as consumer demand has increased. Setting prices by competitive markets avoids the surpluses and shortages that are inevitable with governmental price controls. c. setting overall limits on the amount of health care spending will lead to shortages and misallocation of resources. As real income, the average age of the population, and the quantity of health care available all increase in the future, the total amount of health care spending almost certainly should increase. But only the market can determine the efficient amount of health care spending, based on marginal benefits and marginal costs. Supporters of CDHC assert that competitive markets are the most efficient way to allocate limited health care resources. In a CDHC system, most consumers would choose to purchase highdeductible health insurance to cover only catastrophic health care costs. Buying insurance is not an efficient way to pay for rent, utilities, car maintenance, or normal health care expenses. Since catastrophic health insurance would have a high deductible, the cost would be manageable for most people. The government could subsidize the purchase of catastrophic health insurance by persons with low income or with major health problems. Normal health care expenses could be paid by the consumer. The direct payment for health care by the consumer would have a number of advantages over the current health care system or over national health insurance: 1. Since the consumer would be paying the full cost for health care, consumers would be much more cost-conscious than in either the current system or in a national health insurance system. FOR REVIEW ONLY - NOT FOR DISTRIBUTION 30 - 9 Agriculture and Health Care

2. Health care providers would be forced to compete with one another on the basis of price and quality as in other consumer-driven markets. 3. Since the consumer would be paying the full cost for health care, consumers would be less likely to agree to health care services which cost more than they benefit. Consumers would be motivated to seek out information on the relative costs and benefits of health care services, unlike the current system where third-party payment makes it common for consumers to overconsume health care services. NHI would increase the degree of overconsumption by increasing the prevalence of third-party payment. With the information available on the internet, consumers are in a better position than ever to be able to make informed choices about their own health care. Those who oppose consumer-driven health care assert: 1. CDHC will benefit those in good health, but will increase the burden on those with serious health problems. If those in good health move to high-deductible health insurance plans, premiums will increase for those who, because they have serious health problems, choose more comprehensive health insurance plans. The comprehensive health insurance plans will have an adverse selection of unhealthy people, forcing the premiums higher. 2. In many situations, consumers are not really capable of making informed choices about their own health care. The high deductible associated with catastrophic health insurance may encourage consumers to forgo routine checkups and other preventive care, which would be paid for out-of-pocket. In this situation, consumers may be underconsuming colonoscopies, which would have to be paid for directly by the consumer, and overconsuming colon cancer treatment, which would be expensive enough to be paid for by the catastrophic health insurance. Affordable Care Act In March, 2010, President Obama signed the Affordable Care Act (ACA). The ACA does not create national health insurance, but moves in the direction of more governmental control over health insurance, and more governmental payment for health insurance. Among the major provisions of the ACA are: 1. Provisions aimed at reducing the number of people who are uninsured; a. Eligibility for Medicaid was expanded to include anyone with a household income below 138 percent of the poverty level. However, the Supreme Court ruled that states could not be forced to participate in the Medicaid expansion. As of December 16, 2014, 23 states had chosen to not participate in the Medicaid expansion. b. The uninsured became able to purchase private health insurance through state-based health insurance exchanges. For those who earn too much to qualify for Medicaid but earn less than 400 percent of the poverty level, the federal government subsidizes the premiums on a sliding scale with a refundable tax credit. c. Most people who do not have employer-provided or government-provided health insurance are required to purchase health insurance or pay a penalty. The Supreme Court upheld this “individual mandate” as an exercise of the federal government’s taxing power. d. For employers with more than 50 full-time employees and without an adequate employerprovided health insurance plan, a tax penalty will be assessed beginning in 2015. e. For employers with 25 or fewer full-time equivalent employees, tax credits are available to offset part of the cost of employer-provided health insurance. 2. Provisions that place restrictions on health insurance providers; a. Insurance providers are not allowed to set lifetime limits on coverage or to cancel policyholders who become sick. b. All children (unless they have their own employer-provided health insurance) must be allowed to remain on their parents’ health insurance policies until they are age 26. c. Insurance plans are not allowed to charge deductibles for certain types of preventive care. FOR REVIEW ONLY - NOT FOR DISTRIBUTION Agriculture and Health Care 30 - 10

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    PRINCIPLES OF ECONOMICS JEFF HOLT S

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    Principles of Economics, 6th Editio

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    16. Study Guide for Chapter 7 17. C

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    11. Appendix: Book Review - “The

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    20. Appendix: The NCAA Cartel 21. S

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    Introduction: A Brief History of U.

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    In the twentieth century, per capit

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    Appendix: The 35 Largest National E

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    Multiple Choice: ___ 1. The Jamesto

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    2. Describe the economic cost of th

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    Chapter 1 Scarcity and Choices The

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    Example 5B: At the end of 1982, the

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    Example 11: When Cindy quits her jo

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    consequences may result in failure

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    An upward sloping curve (as in Exam

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    In making decisions, humans tend to

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    5. ______________________ _________

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    ___ 13. If the value of one variabl

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    Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7

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    Chapter 2 Trade and Economic System

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    Example 4B: The following quantitie

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    1. An increase in the quantity of r

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    3. For whom to produce? This is det

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    The graph below illustrates the shi

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    The two primary economic systems ar

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    ___ 12. The capitalist vision sees

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    ___ 25. According to the book “Ca

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    Chapter 3 Demand, Supply, and Equil

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    . For inferior goods, income and de

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    The same information can be placed

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    Not only does a free market elimina

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    $7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3

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    Example 17: The graph below illustr

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    Questions for Chapter 3 Fill-in-the

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    ___ 12. Assuming a market originall

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    $8 - 7 - 6 - 5 - Price 4 - 3 - 2 -

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    Chapter 4 Inflation and Unemploymen

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    Computing the Rate of Inflation The

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    Full Employment Though unemployment

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    3. Cyclical unemployment - due to d

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    During the Great Depression, the ec

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    Appendix: Think Like an Economist -

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    Answer questions 8. and 9. based on

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    ___ 25. The extension of unemployme

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    Chapter 5 Measuring Total Output: G

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    5. Leisure. Leisure time is by defi

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    The U.S. is a high per capita GDP c

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    Example 17: In “An International

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    The simple circular flow diagram be

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    ___ 3. Which of the following would

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    2. Explain what nonproduction trans

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    Chapter 6 The Aggregate Market The

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    Example 2C: Assume the same facts a

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    Example 5B: The price of crude oil

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    Price Level Real GDP SRAS AD 2 AD 1

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    Appendix: Why the Aggregate Demand

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    ___ 3. DEF Company can invest in ne

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    2. List and explain the two factors

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    Chapter 7 Classical Economic Theory

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    Notice that the investment demand c

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    Long-Run Equilibrium If Real GDP is

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    Example 6B: When the economy is in

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    Laissez-faire If the economy is sel

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    ___ 5. According to Say’s Law: a.

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    3. On the graph below, draw an aggr

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    Chapter 8 Keynesian Economic Theory

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    Example 2B: The graph below illustr

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    Example 5: Assume that the table be

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    Notice on the graph on the previous

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    According to Keynesian theory, a ch

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    “The General Theory” also inclu

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    ___ 8. If the consumption function

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    3. If the MPC is .667, and investme

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    Chapter 9 Fiscal Policy The basic e

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    Keynesian Fiscal Policy Theory and

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    Example 5A: The federal government

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    The Laffer Curve What will happen t

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    Appendix: The Importance of Incenti

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    ___ 4. A decrease in government exp

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    2. Explain what automatic stabilize

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    Chapter 10 Money, Money Creation, a

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    Example 4B: The castaways on Gillig

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    Looking at the balance sheet below,

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    Demand-side One-shot Inflation Exam

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    4. Inflation increases uncertainty

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    life; it came into existence not by

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    calculated by using the potential d

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    ___ 12. If the required-reserve rat

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    4. Referring to the balance sheet f

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    Chapter 11 The Federal Reserve Syst

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    5. After Bank X sells the $300,000

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    Low Mortgage Interest Rates Mortgag

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    Relaxed Standards for Mortgage Loan

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    The Bursting of the Housing Bubble

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    On February 17, 2009, the federal g

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    Fed policies caused short-term inte

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    ___ 10. The Fed’s most important

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    ___ 25. In response to the recessio

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    Chapter 12 Monetary Policy The basi

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    2. A change in aggregate demand (AD

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    Monetarist Transmission Mechanism C

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    3. Borrowers do not have to seek ou

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    Appendix: Book Review - “The Age

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    Questions for Chapter 12 Fill-in-th

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    ___ 16. The primary source of incom

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    7. According to Alan Greenspan, wha

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    Chapter 13 Taxes, Deficits, and the

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    Example 5: In 2015, Taxpayer A had

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    of $5 and a quantity of 10 units. T

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    The complexity of the tax law also

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    the current government spending and

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    cut of 1964. The top rate was lower

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    ___ 6. Federal excise taxes: a. are

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    3. How would eliminating the loopho

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    Chapter 14 Economic Growth The basi

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    2. Labor. Labor can contribute to e

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    estricting international trade (e.g

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    An improvement in technology (e.g.

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    The table below shows the economic

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    will increase both Real GDP and per

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    ___ 8. Which of the following is co

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    ___ 26. The opinion that economic g

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    Chapter 15 Less Developed Countries

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    Example 8: Countries A, B, C, and D

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    Obstacles to Economic Development f

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    c. Restrictions on international tr

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    Appendix: Book Review - “The Powe

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    Example 25: In Brazil, about half t

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    Study Guide for Chapter 15 Chapter

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    ___ 13. Among the counterproductive

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    4. List four ways that governments

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    Chapter 16 International Trade The

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    Other Benefits of Free Internationa

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    Example 6: The graph below illustra

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    competitive disadvantage. But dumpi

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    is only 25% as productive as before

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    Smith was skeptical of government a

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    ___ 4. For Country X, what is the o

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    ___ 18. Frédéric Bastiat’s “P

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    4. On the graph below: (1) What is

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    Chapter 17 Elasticity We are often

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    Example 4A: What is price elasticit

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    Example 5A: Gertie’s Gas and Go i

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    Example 10A: When the price of Good

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    Example 13B: On the graph below, su

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    $7 - 6 - 5 - Price 4 - 3 - 2 - 1 -

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    In the long run, would the deadweig

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    ___ 7. The factors that determine w

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    3. a. Which price (or prices) from

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    Chapter 18 Utility The basic econom

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    Nonetheless, society generally assu

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    Example 9: Capital City operates a

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    Marginal rate of substitution - the

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    The diamond-water paradox is the ob

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    Complete the table below to answer

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    4. The graph below shows indifferen

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    Chapter 19 The Firm The basic econo

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    than contributing to team productio

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    1. Difficulty in raising large amou

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    Corporations also use self-financin

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    Example 24: A blacksmith who produc

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    For financing needs, proprietorship

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    ___ 13. Corporations: a. are comple

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    5. List two things that the absence

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    Chapter 20 Production and Costs The

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    In Example 5B, Birdwell finds that

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    variable cost initially decreases,

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    Quantity TC MC AFC AVC ATC 0 240 X

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    If the scale of operation is increa

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    average total cost. Average fixed c

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    ___ 11. Concerning the cost curves:

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    5. Complete the following cost tabl

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    Chapter 21 Perfect Competition The

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    Even though a perfect competitor ca

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    Example 6C: This example builds on

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    At what price will there be neither

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    Appendix: Perfect Competition in th

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    Multiple Choice: ___ 1. A perfect c

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    ___ 17. Perfect competition: a. req

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    Answers for Chapter 21 Fill-in-the-

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    Chapter 22 Monopoly Of the four mar

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    3. Exclusive ownership of an essent

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    maximizing quantity (4 units) creat

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    $22 - 20 - 18 - 16 - 14 - Deadweigh

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    2. Negotiating, beginning at a high

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    Legal barriers are created by gover

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    ___ 8. The slope of the demand curv

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    Price Quantity 3. List some of the

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    Chapter 23 Monopolistic Competition

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    For Percomp (the perfect competitor

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    Example 7A: The graph below represe

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    Example 9: The Organization of the

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    Example 12 illustrates the dilemma

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    its current price and quantity. The

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    ___ 14. Game theory: a. is a method

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    Answers for Chapter 23 Fill-in-the-

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    Chapter 24 Factor Markets The basic

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    $ $240 - 200 - 160 - 120 - 80 - 40

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    Since producers will attempt to equ

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    2. Differences in nonmoney aspects

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    were his strikeouts, walks, and hom

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    ___ 3. To maximize profits, a produ

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    ___ 19. According to the book, “M

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    Multiple Choice: 1. a. 8. c. 15. d.

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    Chapter 25 Labor Unions The primary

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    The elasticity of demand for union

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    Example 4A: Assume that the graph b

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    Notice from the graph in Example 6

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    Wage Factory A Quantity of Labor S

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    As a cartel, a labor union faces a

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    ___ 10. For a monopsony: a. there i

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    3. The graph below represents a lab

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    Chapter 26 Interest, Present Value,

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    An increase in expected rates of re

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    An asset is valuable because we exp

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    Example 13B: General Ordnance prove

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    Appendix: Present Value Table One f

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    ___ 4. An increase in expected rate

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    Problems: 1. List and explain the t

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    Chapter 27 Market Failure The basic

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  • Page 514 and 515: How is this story an analogy for th
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  • Page 536 and 537: Political bias, 9-4, 12-7 Political
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  • Page 540 and 541: Upturns, 9-4 USDA, 27-9, 30-1-2, 30
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