Multiple Choice Questions Each question is worth 5 marks. 1. A tax on cigarettes
ID: 1149941 • Letter: M
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Multiple Choice Questions Each question is worth 5 marks. 1. A tax on cigarettes will reduce the number of smokers but society should not impose it because it will impose more burden on lower income individuals than higher income ones. A. This is a positive statement. B. This is a normative statement. C. This is neither a positive nor a normative statement D. This is both a positive and normative statement. 2. Health care A. B. C. D. Is the most important determinant of health in OECD countries is the most expensive determinant of health in OECD countries spending continues to grow rapidly in most OECD countries sector is one of the largest sectors in most OECD countries 3. The discount rate A. B. C. D. should equal the rate of inflation should equal the real rate of interest has intergenerational consequences should only be applied to costs 4. Which statement best describes technical efficiency? A. Enables producers to identify the most up to date production technology B. Maximizes outputs for given inputs conditional on a production technology C. Can only be identified when costs of alternative inputs are known D. Always leads to cost efficiency and allocative efficiency 5. Which statement is NOT true? A. B. C. D. Marginal analysis and average analysis lead to the similar outcomes. Marginal analysis asks 'what happens if I do something a little more?" Marginal analysis is used to identify the optimal level of a good or activity. Total benefit is maximized where marginal cost equals marginal benefit. 6. Formal valuation of consequences is foregone in A. Cost-Benefit Analysis B. Cost-Effectiveness Analysis C. Cost-Utility Analysis D. All types of evaluation must value consequencesExplanation / Answer
Answer : 1) Option D is correct. Positive statements explain the real facts. According to the question, after imposing tax on cigarette the number of smokers reduces ; this is positive statement. Normative statement states the value judgment. According to the question society should not impose tax on cigarette as lower incomes individuals bear more burden than higher income; this is normative statement.
2) Option D is correct. According to OECD report, one of the largest sector is health care in most countries of OECD. America is in number 1 of OECD countries for providing health services. 78.8% is the life expectancy according to OECD report.
3) Option B is correct. Discount rate is that interest rate which is charged by the central bank discount window to commercial banks or to other financial institutions for loans. Therefore, the real interest rate and discount rate should be equal.
4) Option B is correct. Technology usation in production increase the output level for given inputs. This is an example of technical efficiency.
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