Question: Input demand is called derived demand because:
Answer Options:
a. demand for an input is derived from the demand for the product or service it produces
b. demand for the output produced is also derived from consumer demand
c. input demand actually determines how much output is produced
d. demand for an input is derived from its availability in the input market
Answer: a. demand for an input is derived from the demand for the product or service
Question: In order to be a successful price discriminator, a provider must have a degree of market power (depicted by a downward-sloping demand curve) and meet what other condition(s)?
Answer Options:
a. Demand for services must be relatively price elastic
b. Profitable service expansion opportunities must be limited
c. Customers cannot know that different prices are being charged
d. Markets must be segmentable, identifying differences in ability to pay
e. The provider must have excess capacity to accommodate the extra business
Answer: d. Markets must be segmentable, identifying differences in ability to pay
Question: Which of the following characteristics is true of the pharmaceutical industry?
Answer Options:
a. Low fixed cost
b. Virtually guaranteed profits when the product is introduced
c. Exclusive rights to market and sell patented products
d. High variable cost
e. Non-segmentable markets
Answer: c. Exclusive rights to market and sell patented products
Question: Each year, the Medicare trustees issue a report on the health of the program. According to the 2016 report, which of the following statements is true?
Answer Options:
a. Based on historical evidence, hospital productivity is expected to increase substantially in the future, lowering Part A spending substantially
b. The Medicare Hospital Trust fund provides permanent funding for Part A spending
c. The net present value of future Medicare obligations that are currently unfunded will require Congress to appropriate funds beyond current law approaching $60 trillion dollars, over 300 percent of current gross domestic product
d. Fortunately, Medicare’s trustees have historically overstated the system’s future revenue shortfalls
e. Medicare spending has been holding steady at approximately 1 percent of gross domestic product since 1975 and is expected to remain below 3 percent of gross domestic product over the next decade
Answer: c. The net present value of future Medicare obligations that are currently unfunded will require Congress to appropriate funds beyond current law approaching $60 trillion dollars, over 300 percent of current gross domestic product
Question: If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be?
Answer Options:
a. W0 and E2
b. W1 and E1
c. W0 and E0
d. W0 and E1
e. W2 and E0
Answer: e. W2 and E0
Question: The rate of return on an investment in medical education:
Answer Options:
a. is inversely related to the number of years in the profession
b. is inversely related to the length of time spent in formal schooling
c. is much higher than the rate of return on an undergraduate business degree
d. will increase with an increase in the availability of student loans
e. is inversely related to income
Answer: c. is much higher than the rate of return on an undergraduate business degree
Question: The tax fully dedicated to provide support for Medicare Part A is:
Answer Options:
a. the mandate tax paid by individuals who do not purchase health insurance
b. the federal income tax
c. a tax on the health insurance premiums paid for all group plans
d. levied on the Medicare Trust Fund
e. a 2.9 percent payroll tax paid by all workers, regardless of their age
Answer: e. a 2.9 percent payroll tax paid by all workers, regardless of their age
Question: Which of the following statements is true about cost shifting in hospitals?
Answer Options:
a. Regardless of payer mix, hospitals are taking full advantage of their bargaining power with payers who are able to cost shift
b. The ability to cost shift depends on a hospital’s payer mix
c. The positive correlation coefficient between cost-to-payment ratios for various payers indicates that cost shifting is taking place
d. Capacity-constrained medical providers are not able to cost shift
e. Classic Ramsey pricing can be interpreted in different ways, leading researchers into arguing that if it looks like cost shifting, it probably is cost shifting
Answer: b. The ability to cost shift depends on a hospital’s payer mix
Question: Approximately what percentage of worldwide research and development spending on pharmaceuticals is based in the United States?
Answer Options:
a. 75 percent
b. 45 percent
c. 95 percent
d. 25 percent
e. 55 percent
Answer: e. 55 percent
Question: What was the main effect of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on United States’ domestic policy?
Answer Options:
a. It lowered the life of patents from 20 years from the date of grant to 17 years from the date of application
b. It significantly increased the ability of generic substitutes to compete with brand name drugs
c. It allowed generic drugs to rely on the original safety and efficacy evidence provided by the equivalent branded drug
d. It extended the life of patents from 17 years from the date of grant to 20 years from the date of application
Answer: d. It extended the life of patents from 17 years from the date of grant to 20 years from the date of application
Question: Part B pays what percentage of the allowable fee set by Medicare?
Answer Options:
a. 85 percent
b. 70 percent
c. 80 percent
d. 75 percent
e. 90 percent
Answer: c. 80 percent
Question: The majority of pharmaceutical advertising is directed at which of the following groups?
Answer Options:
a. Investors
b. Government regulators
c. Politicians
d. Physicians
e. Potential patients
Answer: d. Physicians