Question 1

Co-pay is a fixed amount that the insured person must pay each time he or she uses health care.

Accepted Answer

A co-pay is a fixed amount that the insured person must pay each time he or she uses health care services.

Question 2

Both Google and Facebook make their money by charging advertisers to run their ads, and the bigger an audience they have, the more they can charge.

Accepted Answer

Both Google and Facebook generate revenue by selling advertising space on their platforms, and the cost for running ads depends on various factors such as the size and engagement of the audience.

Question 3

If you have a $50 co-pay, you must pay ____ for each doctor's visit.

Accepted Answer

A $50 co-pay means that you must pay $50 for each doctor's visit.

Question 4

Non-tariff barriers are tools that countries use to restrict trade such as regulatory or legal barriers or slow processing of goods at borders.

Accepted Answer

Non-tariff barriers are indeed tools that countries use to restrict trade. These can take the form of regulations, standards, licensing requirements, or other measures that make it difficult or costly for foreign products to enter a domestic market. Non-tariff barriers are often used as a way to protect domestic industries or promote certain policies or values, but they can also be used as a form of protectionism.

Question 5

Adverse selection in health insurance occurs when those who are less likely to need health care, such as younger and healthier workers, choose not to purchase it.

Accepted Answer

Adverse selection occurs when individuals with a higher risk of using health care services are more likely to purchase health insurance, while those with a lower risk are less likely to do so.

Question 6

Artificial intelligence (AI) refers to creating and using intelligent machines that work and react like humans.

Accepted Answer

AI is the creation of intelligent machines that can work and react like humans, based on algorithms and data processing. It involves fields such as machine learning, natural language processing, and computer vision.

Question 7

If you have a policy with 20 percent co-insurance, your insurer will pay ___ percent of your bill, leaving ___ percent for you.

Accepted Answer

In a policy with 20 percent co-insurance, the insurer pays 80 percent of the bill, and the policyholder is responsible for the remaining 20 percent.

Question 8

Facebook and Google were responsible for over 60 percent of digital advertising expenditures in 2017.

Accepted Answer

According to eMarketer, Facebook and Google accounted for 63.1% of digital advertising expenditures in 2017.

Question 9

A trade war is said to occur when each country takes steps to make it harder for other countries to sell into its markets.

Accepted Answer

A trade war is a situation where countries take measures to restrict imports from their trading partners, leading to retaliatory responses and ultimately reducing overall trade. These measures could include imposing tariffs and quotas, enforcing trade barriers or regulating imports. The end result is typically that the affected industries and consumers in each country suffer as a result of the increased costs, reduced consumer choice and lower economic growth.

Question 10

When positive network effects are present, platform markets exhibit a particular kind of economy of scale.

Accepted Answer

Positive network effects mean that the value of a platform or product increases as more people use it. As more users join a platform market, the platform becomes more valuable to all users, creating a self-reinforcing cycle. This leads to a kind of economy of scale where increased usage results in increased value for all participants.

Question 11

A deductible is a fixed amount that the insured person must pay before their insurance kicks in.

Accepted Answer

A deductible is a fixed amount that the insured person must pay out of their own pocket before their insurance company will begin to cover the remaining costs of a claim.

Question 12

A pricing strategy below cost is often claimed to be ________, done to drive rivals out of business so that the firm can subsequently raise its price back up to the monopoly level.

Accepted Answer

Predatory pricing is intentionally setting prices below cost to drive competitors out of the market and eventually increasing prices back to a monopolistic level. This is considered unethical and illegal in many countries.

Question 13

Social Security is an important example of a portable benefit that follows the worker, no matter who their employer is.

Accepted Answer

Social Security is a government-run program that provides retirement, disability, and survivor benefits to eligible individuals. It is not tied to any specific employer and follows the worker throughout their career.

Question 14

Contingent workers are those who have no regular employment arrangement (such as a 40-hour week), but rather work as and where there is work to be done.

Accepted Answer

Contingent workers are characterized by their lack of regular employment arrangement and instead work as needed.

Question 15

The default rate actually drops as the amount borrowed increases, that is, default rates are highest among those with the smallest student loan debts.

Accepted Answer

This is a true statement. Studies have shown that students with smaller loan debts are more likely to default on their loans than those with larger debts. This is believed to be due to a combination of factors, including lower earnings potential and a higher likelihood of dropping out of college before completing their degree.

Question 16

Network effects occur when the value of a platform to its users changes as the number of users rises.

Accepted Answer

This is the definition of network effects. As more users join a platform, it becomes more valuable to existing users due to increased network effects, such as more interaction, more content creation, and increased network effects.

Question 17

In the health insurance context, moral hazard occurs when patients make less healthy choices and doctors provide treatments that have little medical benefit because they know the costs will be covered by insurance.

Accepted Answer

Moral hazard refers to the behavior of insured individuals and healthcare providers that increases costs for insurers, such as making less healthy choices or providing unnecessary medical treatments because they are insulated from the full cost by insurance.

Question 18

The United States spends much more on health care per capita than other nations do but does not get better health outcomes.

Accepted Answer

This is a well-documented phenomenon known as the "health care spending paradox." Despite spending the most on health care per capita among developed nations, the United States has poorer health outcomes in areas such as life expectancy, infant mortality, and chronic disease management.

Question 19

The United States tends to rely more on private health insurance than other countries do.

Accepted Answer

This is true. While other countries may have a mix of public and private health insurance options, the US has a stronger emphasis on private health insurance, with many individuals and families obtaining coverage through their employer or purchasing plans on the individual market.

Question 20

Platform companies may charge low prices on one side not to drive rivals out of business but to expand the market on the other side.

Accepted Answer

Platform companies often employ low pricing strategies to attract and increase the number of users on one side of the market, which can ultimately benefit the other side of the market as well as the platform itself. This is known as the "chicken-and-egg" problem, where the platform needs users to attract more users, but users need a critical mass of participants to engage with the platform. By charging low prices, the platform can encourage more users to join and participate, ultimately expanding the market for both sides of the platform.

Quiz 37: Contemporary Issues in the Useconomy