Question 1

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 charging advertisers to run their ads on their platforms. The amount they can charge is based on the size and engagement of their audience.

Question 2

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

Accepted Answer

A co-pay is the fixed amount that you are responsible for paying for each visit to the doctor, regardless of the total cost of the visit. In this case, the co-pay is $50, so you would be responsible for paying $50 for each visit.

Question 3

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 4

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-pocket before their insurance begins covering costs.

Question 5

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

A pricing strategy below cost that is done to drive rivals out of business so that the firm can subsequently raise its price back up to the monopoly level is referred to as predatory pricing. This is generally considered unfair and anti-competitive behavior.

Question 6

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

The answer of Adverse selection in health insurance occurs when...

Question 7

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 percent of digital advertising spending in 2017.

Question 8

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 operate by attracting one group on their platform with low prices or even free services, while charging higher prices to the other group who benefits from the interaction. By doing so, the company can create a larger market for both sides and increase its overall revenue. This strategy is known as “cross-subsidization”.

Question 9

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

Accepted Answer

Compared to other developed countries, the United States has a greater reliance on private health insurance. This is due to a combination of historical factors, political decisions, and the structure of the US healthcare system.

Question 10

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 tendency of individuals to make riskier choices when the potential costs of those choices are borne by others. In the context of health insurance, moral hazard can arise when patients are insulated from the true costs of their medical care and thus may be more likely to seek unnecessary or costly treatments. Similarly, providers may be more likely to prescribe or perform such treatments if they know that insurance will cover the costs.

Question 11

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, with the US spending nearly twice as much per capita as other high-income countries, but ranking poorly on many health outcome measures such as life expectancy and infant mortality.

Question 12

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 statement is true according to studies that have shown that default rates are highest among those with the smallest student loan debts.

Question 13

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 they use health care.

Question 14

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

Accepted Answer

Social Security benefits are tied to the worker and are not affected by changes in employers or employment status.

Question 15

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

Accepted Answer

Artificial intelligence involves creating machines that can mimic human intelligence, including the ability to learn, reason, and problem-solve.

Question 16

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

Accepted Answer

Positive network effects refer to the situation where the value of a platform increases as more users join and utilize it. This leads to a situation where the platform experiences economies of scale, meaning that its cost per user decreases as the number of users increases. Therefore, the statement is true.

Question 17

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 used by countries to restrict trade, and can take the form of regulations, legal barriers, or administrative delays at borders.

Question 18

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 do not have a regular employment arrangement and instead work on an as-needed basis.

Question 19

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

This is correct. In a trade war, countries impose tariffs, quotas, or other barriers to trade in order to protect their own industries and make it more difficult for other countries to sell their goods and services within that market. This can lead to a cycle of retaliation and escalation, with each country imposing more restrictions on the other's exports.

Question 20

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

Accepted Answer

Network effects occur because as more users join a platform, there are more connections and opportunities for interaction, which increases the value of the platform to each user. This creates a positive feedback loop in which the value of the platform continues to grow as more users join.

Quiz 37: Contemporary Issues in the Us Economy