Questions and Answers of The Law Of Healthcare Administration

6 Consider two types of divorce laws. Law A allows either the husband or the wife to obtain a divorce without the other person’s consent. Law B permits a divorce only if both parties agree to the
5 Give an example that illustrates the difference between private costs and social costs.
4 When will asymmetric information in a product market not cause market failure?
3 In Exhibit 3, explain why the shaded triangle is representative of a market failure.
2 Suppose there is a negative externality. If a tax is used to correct for the negative externality, what condition must be satisfied? (What must the tax equal?)
1 Under what condition will MSC MPC ? When will MSB MPB ?
3 Diagrammatically represent pure economic rent.
2 Bobby is a baseball player who earns $1 million a year playing for team X. If he weren’t playing baseball for team X, he would be playing baseball for team Y and earning $800,000 a year. If he
1 Compute the following:a. The present value of $25,000 each year for 4 years at a 7 percent interest rate.b. The present value of $152,000 each year for 5 years at a 6 percent interest rate.c. The
16 “As the interest rate falls, firms are more inclined to buy capital goods.” Do you agree or disagree? Explain your answer.
15 Describe the effect of each of the following events on individuals’rate of time preference and thus on interest rates:a. A technological advance that increases longevity.b. An increased threat
14 Make an attempt to calculate the present value of your future income.
13 It has been said that a society with a high savings rate is a society with a high standard of living. What is the link(if any) between saving and a relatively high standard of living?
12 “The more economic rent a person receives in his job, the less likely he is to leave the job and the more content he will be on the job.” Do you agree or disagree? Explain your answer.
11 What is the overall economic function of profits?
10 What is the link between profit and uncertainty?
9 What does it mean to say that land rent is price determined, not price determining?
8 In what ways are a baseball star who can do nothing but play baseball and a parcel of land similar?
7 Some people have argued that in a moneyless (or barter)economy, interest would not exist. Is this true? Explain your answer.
6 What type of person is most willing to pay high interest rates?
5 The real interest rate can remain unchanged as the nominal interest rate rises. Do you agree or disagree with this statement?Explain your answer.
4 The interest rate on loan X is higher than the interest rate on loan Y. What might explain the difference in interest rates between the two loans?
3 How would the interest rate change as a result of the following?a. A rise in the demand for consumption loans.b. A decline in the supply of loanable funds.c. A rise in the demand for investment
2 What does having a positive rate of time preference have to do with positive interest rates?
1 What does it mean to say that an individual has a positive rate of time preference?
11 How would you determine whether the wage difference between two individuals is due to wage discrimination?
10 Can more people live in poverty at the same time that a smaller percentage of people live in poverty? Explain your answer.
9 What is the effect of age on income distribution?
8 Welfare recipients would rather receive cash benefits than in-kind benefits, but much of the welfare system provides in-kind benefits. Is there any reason for not giving recipients their welfare
7 In what ways does the Rawlsian technique of hypothesizing individuals behind a veil of ignorance help or not help us decide whether we should have a 65-mile-per-hour speed limit or a higher one, a
6 What is a major criticism of the absolute income equality normative standard?
5 What role might each of the following play in contributing to income inequality?a. Risk taking.b. Education.c. Innate abilities and attributes.
4 Has U.S. income inequality increased or decreased (if we compare the income distribution in 1967 with the income distribution in 2005)? What percentage of total money income did the top fifth of
3 Would you expect greater income inequality in country A, where there is great disparity in age, or in country B, where there is little disparity in age? Explain your answer.
2 “The Gini coefficient for country A is 0.35, and for country B it is 0.22. Therefore, the bottom 10 percent of income recipients in country B have a greater percentage of the total income than
1 What percentage of total money income did the lowest fifth of households receive in 2005? The fourth fifth?
3 Is it possible for everyone’s real income to rise even though the income distribution in a society has become more unequal?Prove your answer with a numerical example.
2 In Exhibit 7, using Lorenz curve 2, approximately what percentage of income goes to the second-highest 20 percent of households?
1 The lowest fifth of income earners have a 10 percent income share, the second fifth a 17 percent income share, the third fifth a 22 percent income share, the fourth fifth a 24 percent income share,
3 Diagrammatically explain how changes in supply conditions and wage rates in the unionized sector can cause changes in supply and wage rates in the nonunionized sector.
2 Which demand curve for labor in the following figure exhibits the most pronounced wage-employment trade-off?Explain your answer. Wage Rate 0 D3 D D2 Quantity of Labor
1 Determine the appropriate numbers for the lettered spaces. (2) (3) (1) Wage Total (4) Marginal Workers Rate Labor Cost Factor Cost 1 A $12.00 $12.00 2 $12.10 24.20 3 12.20 F 4 B D 12.60
14 Contrast the traditional (or orthodox) and new view of labor unions.
13 Unions can affect (a) a firm’s profits, (b) the price consumers pay for a good, and (c) the wages received by nonunion workers. Do you agree or disagree? Explain your answer.
12 What forces may lead to the breakup of an employer(monopsony) cartel?
11 A discussion of labor unions usually evokes strong feelings.Some people argue vigorously against labor unions; others argue with equal vigor for them. Some people see labor unions as the reason
10 Some persons argue that a monopsony firm exploits its workers if it pays them less than their marginal revenue products. Others disagree. They say that as long as the firm pays the workers their
9 What is the effect of labor unions on nonunion wage rates?
8 Organizing labor unions may be easier in some industries than in others. What industry characteristics make unionization easier?
7 Explain why the monopsonist pays labor a wage rate less than labor’s marginal revenue product.
6 Most actions or practices of labor unions are attempts to affect one of three factors. What are these three factors?
5 What view is a labor union likely to hold on each of the following issues?a. Easing of the immigration laws.b. A quota on imported products.c. Free trade.d. A decrease in the minimum wage.
4 Identify one practice of labor unions consistent with:a. Affecting the elasticity of demand for union labor.b. Increasing the demand for union labor.c. Decreasing the supply of labor union workers.
3 What does the elasticity of demand for labor have to do with the wage-employment trade-off?
2 Will a union behave differently if it wants to employ all members instead of maximizing the total wage bill? Explain your answer.
1 What is the difference between a craft (trade) union and an industrial union?
5 Look at the two factor demand curves in the following figure.Is the price of the product that labor goes to produce higher for MRP2 than for MRP1? Explain your answer. Wage Rate 0 MRP MRP2 Quantity
4 Explain why the factor supply curve is horizontal for a factor price taker.
3 In one diagram, draw the VMP curve and the MRP curve for an oligopolist. Explain why the curves look the way you drew them.
2 If the price of a factor is constant at $48, how many units of the factor will the firm buy?
1 Determine the appropriate numbers for the lettered spaces. (1) Units of Factor X Output (2) Quantity of (3) Marginal Physical Product of X (MPP) (4) Product Price, 0123 15 0 Marginal Revenue (P =
16 What do substitution and income effects have to do with the supply curve of labor?
15 How might you go about determining whether a person is worth the salary he or she is paid?
14 Explain the relationship between each of the following pairs of concepts:a. The elasticity of demand for a product and the elasticity of demand for the labor that produces the product.b. The ratio
13 Discuss the firm’s objective, its constraints, and how it makes choices in its role as a buyer of resources.
12 Explain why the market demand curve for labor is not simply the horizontal addition of the firms’ demand curves for labor.
11 Prepare a list of questions that an interviewer is likely to ask an interviewee in a job interview. Try to identify which of the questions are part of the interviewer’s screening process.
10 Discuss the factors that might prevent the equalization of wage rates for identical or comparable jobs across labor markets.
9 Using the theory developed in this chapter, explain the following:a. Why a worker in Ethiopia is likely to earn much less than a worker in Japan.b. Why the army expects recruitment to rise during
8 What might be one effect of government legislating wage rates?
7 What is the relationship between labor productivity and wage rates?
6 What forces and factors determine the wage rate for a particular type of labor?
5 The supply curve is horizontal for a factor price taker; however, the industry supply curve is upward sloping. Explain why this occurs.
4 Compare the firm’s least-cost rule to how buyers allocate their consumption dollars.
3 “VMP MRP for a price taker but not for a price searcher.”Do you agree or disagree with this statement? Explain your answer.
2 Why is the MRP curve a firm’s factor demand curve?
1 What does it mean to say that the demand for a factor is a derived demand?
4 Which quantity in the figure is consistent with profit regulation?With price regulation? Explain your answers. Price P P 1 P3 D 0 Q1 Q2 Q3 MC ATC Quantity
3 Will the firm in the figure earn profits if it produces Q3 and charges P3? Explain your answer. Price P P 1 P3 D 0 Q1 Q2 Q3 MC ATC Quantity
2 Is the firm in the figure a natural monopoly? Explain your answer. Price P P 1 P3 D 0 Q1 Q2 Q3 MC ATC Quantity
1 Calculate the Herfindahl index and the four-firm concentration ratio for the following industry: Firms Market Share A 17% B 15 C 14 D 14 E 12 F 10 GH 9 9
14 Explain how the lock-in effect might make it less likely for the firm (that benefits from the lock-in effect) to innovate.
13 Discuss the advantages and disadvantages of regulation (as you see it).
12 It is usually asserted that public utilities such as electric companies and gas companies are natural monopolies, but an assertion is not proof. How would you go about trying to prove (or
11 In your opinion, what is the best way to deal with the monopoly power problem? Do you advocate antitrust laws, regulation, or something not discussed in the chapter? Give reasons for your answer.
10 The courts have ruled that it is a reasonable restraint of trade (and therefore permissible) for the owner of a business to sell his business and sign a contract with the new owner saying he will
9 George Stigler and Claire Friedland studied both unregulated and regulated electric utilities and found no difference in the rates they charged. One could draw the conclusion that regulation is
8 What is the major difference between the capture theory of regulation and the public interest theory of regulation?
7 Why might profit regulation lead to rising costs for the regulated firm?
6 Explain price regulation, profit regulation, and output regulation.
5 What is the implication of saying that regulation is likely to affect incentives?
4 How does a vertical merger differ from a horizontal merger?Why would the government look more carefully at one than at the other?
3 What is one difference between the four-firm concentration ratio and the Herfindahl index?
2 Explain why defining a market narrowly or broadly can make a difference in how antitrust policy is implemented.
1 Why was the Robinson-Patman Act passed? The Wheeler-Lea Act? The Celler-Kefauver Antimerger Act?
6 Refer to the following figure. Because of a cartel agreement, the firm has been assigned a production quota of q2 units.The cartel price is P2. What do the firm’s profits equal if it adheres to
5 According to the kinked demand curve theory, if the firm is considering a price hike, which demand curve in the following figure does it believe it faces and why? Price 0 id d Quantity
4 Total industry sales are $105 million. The top four firms account for sales of $10 million, $9 million, $8 million, and$5 million, respectively. What is the four-firm concentration ratio?
3 In Exhibit 6, what is the highest dollar amount to which marginal cost can rise without changing price?
2 Diagrammatically identify a monopolistic competitor that is incurring losses.

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