Briefly describe the most important differences between the market for health care and the market for other goods and services
What will be an ideal response?
Doctors and hospitals that supply most health care are primarily private firms, as is true in the market for other goods and services, but with health care, the government also provides some services directly through the Veterans Health Administration, and indirectly through Medicare and Medicaid. In the market for other goods and services, consumers pay the full market price, but in the market for health care, a typical consumer does not pay the full price because of health insurance.
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Let the production function be q = ALaKb. The function exhibits increasing returns to scale if
A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given.
In economic theory, if an additional worker adds less to the total output than previous workers hired, it is because
A) there may be less that this person can do, given the fixed capacity of the firm. B) he/she is less skilled than the previously hired workers. C) everyone is getting in each other's way. D) the firm is experiencing diminishing returns to scale.