1. Because of the high cost of health insurance, some young adults choose not to buy insurance because they feel they are not likely to become ill. This potentially raises health care costs should uninsured persons become ill and be unable to pay their bills. This is an example of

free-ridership.

external benefits.

nonrivalry in services.

asymmetric information.

2. Consider the equation Y = e + fX. Which letter represents the intercept?

e

f

Y

X

3. In the following graph, calculate the value of consumer surplus in this market.

13 Price ($) CO - - ----- 30 Quantity