1. What does scarcity result in? a. Consumers must balance competing objectives when choosing how to allocate their resources.

b. Scarce resources result in an unsustainable market, which eventually collapses.

c. Given limited resources, it is not possible to produce unlimited output.

d. If there is no demand for a good, the good is produced in excess.

2. What is an economic market?

a. A place where consumers buy goods from every producer at a fixed price.

b. A place where people who demand and supply specific goods come together.

c. A place that requires perfect competition and rules out market failures

d. A place that requires a system of property rights to ensure people can participate in good faith

3. What is efficiency?

a. A term concerning the maximization of benefits/outputs given specific inputs or the minimization of costs for a given level of output.

b. A term that indicates the maximum output possible which all consumers share equally.

c. A term which explains why the inflation in healthcare is rising faster than in other economic sectors, and why drug costs are relatively high.

d. A term defining the cumulative level of output by a firm

4. Which of the following is true for a good with price inelastic demand?

a. When price increases, quantity demanded decreases by a smaller percentage than the price increase

b. When price increases, quantity demanded decreases by a higher percentage than the price increase

c. It has fewer close substitutes relative to other goods, making switching less likely

5. What is consumer surplus?

a) A condition that requires the cost of goods to be higher than in other countries.

b) The difference between what a consumer pays for a good and how much they would have been willing to pay for it.

c) The total value of all goods that a consumer purchases within a given timeframe.

6. Returns to scale

a) Measures the addition to output as one factor to production is increased

b) Vary directly with the level of output

c) Measure the addition to output as the scale of operations increases in the long run so that all inputs can be varied

7. Economies of scale

a) Result in a change in prices as the supplier produce more than quantity demanded

b) Describe the conditions under which long-run average cost decreases as output increases

c) Are present when marginal cost is lower than average cost and the average cost is falling

8. Market failures can be described as

a) Always resulting in monopoly

b) Only possible to address through regulation

c) A situation In which the market does not result in an efficient allocation of resource

9. What is the link between efficient production and the production possibilities frontier?

a) The production possibilities frontier shows the various combinations of goods that are feasible to be produced efficiently.

b) Efficiency makes the production possibilities frontier irrelevant.

c) Inefficient or infeasible combinations of outputs do not lie on the production possibilities frontier.

10. In economic evaluations

a) The measurement or valuation of costs in both alternatives are always expressed in monetary units, regardless of type of economic evaluation

b) The measurement or valuation of consequences are always expressed in monetary units regardless of type of economic evaluation

c) There are two key features: they are comparative analyses and it compares these options in terms of theirs costs and their consequences.

short response

1. Briefly describe the reasons why markets are a useful resource allocation mechanism.

2. In what ways is the supply of health services in practice more complicated than the basic model of supply?

3. Provide an example of positive externalities and one of negative externalities in the context of health care. Describe what aspects of your cited examples make them suitable to be positive/negative externalities.

4. Describe briefly the principal-agent relationship in the context of health care ?

5. Briefly describe the stages of economic evaluation. describe which stages may pose more challenges in the context of economic evaluation in a health care setting