Question: In the 1960s, individuals paid for the majority of their medical care out of pocket. Increased insurance coverage, both private and public, displaced out-of-pocket spending as the primary source of payment. By 2020, what was the forecasted percentage amount of health care spending paid by individuals?
Answer Options: a. 11.6 percent, b. Whatever amount we are currently spending, c. 17.4 percent, d. 6 percent, e. 10.4 percent
Answer: c. 17.4 percent
Question: Inoculation programs against certain diseases such as small pox, polio, and whooping cough create:
Answer Options: a. nonrival goods., b. positive externalities in consumption., c. external costs to society equal to the costs of the program., d. nonexcludable goods., e. public goods.
Answer: b. positive externalities in consumption.
Question: Which of the following is NOT a potential result of ever-increasing health care pricing?
Answer Options: a. Individuals unable to afford insurance bearing the full burden of expensive procedures., b. Reduced access to high-priced procedures., c. Increase in taxation., d. Reduced incentives for innovation., e. Insurance premiums outpacing salary and wage growth.
Answer: d. Reduced incentives for innovation.
Question: Suppose the U.S. Food and Drug Administration restricts the amount of prescription opiates produced and sold in the U.S. market. What is the likely effect on the market for drugs used to control chronic pain in the United States?
Answer Options: a. The price of heroin (an illegal opiate) and its quantity imported will both decrease., b. Demand for drugs is highly elastic, and these policies have little or no effect on consumption., c. The policy will result in fewer individuals overdosing from heroin., d. Marijuana prices, a cocaine substitute grown domestically, will fall., e. The price of prescription opiates will increase and the quantity consumed will decrease.
Answer: e. The price of prescription opiates will increase and the quantity consumed will decrease.
Question: The opportunity cost of investing in a new lithotripter (a machine that pulverizes kidney stones with sound waves) is:
Answer Options: a. measured by the difference between the expected revenues from selling the services of the lithotripter and the invoice cost of the machine., b. the same for every health care provider., c. impossible to calculate., d. defined by the next best use of the money invested in the equipment., e. defined by the dollar cost of the equipment.
Answer: d. defined by the next best use of the money invested in the equipment.
Question: In the nation of Pavlova, a significant proportion of the population suffers from breathing difficulties later in life. Pavlova Medical produces the only prescription drug that is effective in treating the condition. Which of the following terms best describes the situation in the market?
Answer Options: a. Price discrimination, b. Monopoly, c. Lack of price transparency, d. Monopsony, e. Bilateral monopoly
Answer: b. Monopoly
Question: Assuming that providers will only accommodate patient desires up to a point, what effect would a binding price ceiling have on the health care market?
Answer Options: a. Quantity of health care would not be affected., b. Price of health care would not be affected., c. Quantity of health care supplied would increase., d. Price of health care would increase., e. Quantity of health care supplied would fall.
Answer: e. Quantity of health care supplied would fall.
Question: Which of the following is NOT a personal health care expenditure?
Answer Options: a. Prescription drugs, b. Hospital care, c. Program administration, d. Dentists’ services, e. Physicians’ services
Answer: c. Program administration.
Question: What term is used when physicians know more about alternative treatments than their patients do?
Answer Options: a. asymmetric information, b. adverse selection, c. rational ignorance, d. perfect information, e. moral hazard
Answer: a. asymmetric information
Question: If a hospital is experiencing economies of scale:
Answer Options: a. it should reduce its output level to lower costs., b. its average cost curve is negatively sloped as output increases., c. prices are obviously too high., d. quality is falling as output is rising., e. its average cost curve is positively sloped as output increases.
Answer: b. its average cost curve is negatively sloped as output increases.
Question: Which of the following statements is based on positive analysis?
Answer Options: a. Employers should be required to provide health insurance for all full-time workers and their dependents., b. Pharmaceutical prices ought to be lower., c. High health care prices are one of the primary reasons that the United States spends more on medical care than other countries., d. Universal insurance coverage should be the goal of every country., e. Everyone should have the same access to medical care services regardless of the ability to pay for it.
Answer: c. High health care prices are one of the primary reasons that the United States spends more on medical care than other countries.
Question: If two women receive the same hip replacement procedure at a hospital, but are charged differently, it is an example of:
Answer Options: a. third-party payers, b. price discrimination, c. price transparency, d. asymmetric information
Answer: b. price discrimination
Question: Suppose you are a consultant advising the U.S. government on reducing national health care spending. Assuming that providers will accommodate patient desires, what advice could you offer concerning the implementation of a price ceiling?
Answer Options: a. Total spending may rise if providers intensify services and create new technology for the uncontrolled sector., b. A binding price ceiling will always increase total spending., c. Total spending will not change., d. Total spending will fall as long as adequate resources are dedicated to the enforcement of the price ceiling., e. A binding price ceiling will always reduce total spending.
Answer: a. Total spending may rise if providers intensify services and create new technology for the uncontrolled sector.
Question: The cost to society resulting from taxation to finance government spending is called:
Answer Options: a. price transparency, b. price discrimination, c. third-party payers, d. GDP, e. deadweight loss
Answer: e. deadweight loss
Question: An inferior good:
Answer Options: a. has an income elasticity between zero and one., b. causes the demand curve to shift to the left when income rises., c. is sometimes called a “lemon.”, d. is only purchased by people who do not recognize quality., e. exists only in theory.
Answer: b. causes the demand curve to shift to the left when income rises.
Question: All of the following will change the demand for office visits to a physician, except:
Answer Options: a. Unusually cold and damp weather during the winter, b. Television advertising by drug manufacturers to promote a new over-the-counter influenza treatment, c. Layoffs at the local plant, causing a decrease in the number of people with health insurance in the community, d. A change in the price of an office visit, e. A sudden illness
Answer: d. A change in the price of an office visit
Question: If price elasticity is known to be -0.15, what happens to quantity when the price of services at Urban General falls by 10 percent?
Answer Options: a. Quantity demanded rises by 5.0 percent., b. Quantity demanded falls by 5.0 percent., c. Quantity demanded falls by 2.5 percent., d. Quantity demanded increases by 1.5 percent., e. Quantity demanded increases by 15.0 percent.
Answer: c. Quantity demanded falls by 2.5 percent.