Quiz 1 - Health Economics: True or False Questions

Market Structure

• In perfect competition, many firms sell identical products.

Scarcity and Price

• Scarcity gives rise to price.

Business Cycle

• When an economy reaches the peak of its expansion, it is immediately followed by a trough.

International Trade

• The difference in value of goods a country sells abroad compared to those it purchases from other countries is called a trade balance, not a purchasing balance.

Equilibrium

• Equilibrium is the balanced state of a model where all forces described by the model are in balance.
• A model only deviates from equilibrium if a change disrupts its steady state.

Economic Systems

• State capitalism is a system in which the government controls most of the capital.

Factors of Production

• According to economists, the factors of production are scarce.

Microeconomics

• The subject of government's role in an economy is part of the field of macroeconomics, not microeconomics.

Demand and Supply

• An effective advertising campaign for a product would cause a change in demand, not quantity demanded.
• The demand for inferior goods is inversely related to consumers' incomes.
• When income increases, demand for inferior goods decreases.
• If the price of a good rises, consumers will generally decrease the amount they buy.

Opportunity Cost

• Opportunity cost refers to the value of the next best alternative foregone when making a decision.

Monetary Policy

• Monetary policy is primarily controlled by the central bank (not Banko Sentral ng Pilipinas, which is the central bank of the Philippines).

Production and Consumption

• All people are consumers, and some are also producers.

Health Economics

• The goal of the World Health Organization (WHO) is to ensure that more people will have universal health coverage and provide them with better health and well-being.

Needs and Wants

• Needs are what we need to survive, while wants are things we just want.

Inflation

• Inflation occurs when the general price level increases over time, not decreases.

Demand Curve

• A demand curve slopes downward and to the left, not downward and to the right.

Utility

• The law of diminishing marginal utility states that as a person consumes more of a good, the additional satisfaction (utility) from each additional unit decreases.
• The more of a product a person consumes per time period, other things constant, the smaller will be the addition to total utility.

Taxation

• A progressive tax system imposes higher tax rates on higher income levels.

Opportunity Cost

• In economic terms, weighing the two options to choose what you want is known as a trade-off.
• What you sacrifice by choosing each option is known as the opportunity cost.
• The opportunity cost of going to the movie is the value foregone of all feasible alternative actions.

National Income Accounting

• Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country's borders.

Externalities

• Externalities are costs or benefits that spill over to third parties not directly involved in a transaction.