1. Studies have found that higher levels of prescription drug use are positively correlated with life expectancies. This means that:
- people with higher incomes consume more prescription drugs.
- prescription drugs are productive in improving people's health.
- countries should shift their spending from education to prescription drugs.
- national health insurance leads people to buy more prescription drugs.
2. If a physician halves office space and staff, and average costs _______, than _______ of scale are present.
- increase; economies.
- decrease; economies.
- decrease; diseconomies.
- answers b and c are both correct.
3. If a hospital has economies of scale with respect to production, then:
- it must have economies of scope.
- it may or may not have economies of scope.
- it cannot have economies of scope.
- it can only have economies of scope for those activities for which it has economies of scale.
4. If a hospital has economies of scale with respect to production, then:
- it cannot have economies of scope.
- it can only have economies of scope for those activities for which it has economies of scale.
- it may or may not have economies of scope.
- it must have economies of scope.
5. If a hospital has economies of scale with respect to production, then:
- it must have economies of scope.
- it can only have economies of scope for those activities for which it has economies of scale.
- it cannot have economies of scope.
- it may or may not have economies of scope.
6. If a hospital has economies of scale with respect to production, then:
- it cannot have economies of scope.
- it must have economies of scope.
- it can only have economies of scope for those activities for which it has economies of scale.
- it may or may not have economies of scope.
7. If the price elasticity of demand for visits is -0.2, then a 10% increase in price leads to a ____ in quantity demanded.
- 2% decrease
- 20% increase
- 20% decrease
- 2% increase