Question

1. The demand for physicians is unrelated to the price of medical care. a. True b. False

2. In input markets the final demand for output is more elastic than the derived demand for the inputs. a. True b. False

3. An important measure of the profitability of human capital investment

a. Compares the sum of future benefits to the sum of investment costs

b. The nominal rate of return

c. The expected real rate of return

d. Average lifetime in years

Answer 1

1 ans) false

the demand for physicians is related to the price of medical care.To overuse medical care doctors have incentives.demand on health care and price have positive effect.If the price of medical care is increased then the profit of doctors also increases .

2 ans) true

suppose derived demand is firms demand for labour ,if the final output is increased then derived demand for labour also increases which the final output is more elastic. In long run The final demand for output is more elastic.

3 ans)

a) compares sum of future benefits to sum of investment costs

the total cost of human capital is reflected by human capital factor.To compare current cost with future benefit human capital cost is necessary

b) the nominal rate of return

the nominal rate of return is also a measure of human capital cost.