Deck 8: Competitive Markets

Question 1

The actual quantity traded in a market refers to

A) the quantity demanded
B) the quantity utilized
C) the quantity supplied
D) none of the above.

Answer 1

B

Question 2

A dynamic disequilibrium occurs when

A) The market has not had time to adjust to a change
B) The market has not adjusted because of a government policy
C) The market has not adjusted because of market power possessed by sellers

Answer 2

A

Question 3

A type of situation that will result in changes in supply is?

A) A change in input combinations used to produce output by existing suppliers
B) An increase in the capital stock of existing suppliers
C) Entry into the market by new suppliers
D) All of the above

Answer 3

D

Question 4

The analysis of provider behavior involving capital additions has been referred to as

A) short-run analysis
B) long-run analysis
C) marginal analysis
D) simultaneous analysis

Question 5

Product differentiation implies that each supplier then faces

A) A downward-sloping demand curve
B) An upward-sloping demand curve
C) A horizontal demand curve
D) A vertical demand curve

Question 6

A market in economics is a set of arrangements that brings buyers and sellers together in a physical location.

Question 7

Equilibrium is reached when quantity demanded equals the quantity supplied.

Question 8

If any of the initial conditions that influence demand change, there will be a new equilibrium price and a new equilibrium quantity in a competitive market.

Question 9

In a competitive market, a single market-clearing price will emerge.

Question 10

A shortage occurs when the quantity supplied exceeds the quantity demanded.

Question 11

When demand increases and supply decreases, price will decrease.

Question 12

The object of competitive bidding is to have patients treated at the least cost to the public agency.

Question 13

Predict the effect of the following changes on the market price and quantity utilized of eye examinations conducted by ophthalmologists:
a) an increase in the amount of insurance coverage for eye exams
b) an increase in the number of ophthalmologists
c) a decrease in the average age of the population
d) a decrease in the price of eyeglasses

Question 14

The state health care commission is planning to put out bids for care. Physician Group A is considering making a bid but is unsure how much to bid. Group A's actuary has developed four options: bid a price per capita of $1,000, $800, $600, or $400. Group A currently has a wealth level of $1,000. Added profits associated with each level are provided in the accom?panying table. Also provided in this table are the estimated probabilities of each of the four bids being accepted and Group A's utility of each wealth level. Given that Group A is a risk averse, utility-maximizing entity, what bid should it make?

Question 15

What is supplier-induced demand and what is a major problem in verifying its existence?