Hillary Has an Initial Endowment of $500 and Is Interested

question 38

Essay

Hillary has an initial endowment of $500 and is interested in two things: how many visits she can make to the doctor and how much money will be left over to spend on other things.When a trip to the doctor costs $40, Hillary sees the doctor 4 times.After health care reform, a visit to the doctor will cost $10 but her taxes will rise by $160.
a.Explain what conditions are necessary for Hillary to be made better off by health care reform.
b.Is it possible to tell whether Hillary has been made better off with the given information?
c.Explain what conditions are necessary for Hillary to be made worse off by health care reform.
d.Is it possible to tell whether Hillary has been made worse off with the given information?

Evaluate the implications of market structures on firm behavior and market outcomes.

Apply the concept of marginal revenue and marginal cost to decision-making processes in firms.

Discuss the role of fixed costs in the short-run and long-run decisions of firms.

Identify differences in market structures and their impact on pricing and output decisions.

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Definitions:

Cash Dividends

Payments made by a company to its shareholders, usually in the form of cash, out of its profits or reserves.

Stated Rate

The annual interest rate declared on a financial instrument, such as a bond, without accounting for compounding within a year.

Nonparticipating

A term often used in insurance to describe a policy that does not grant the holder the rights to share in the insurer's surplus or dividends.

Paid-In Capital

the amount of money that a company receives from issuing stock to investors, reflecting the capital invested by shareholders.