Question 1

The cost of group health insurance is lower than if an individual buys a policy on his own because

Accepted Answer

A)  the problem of adverse selection is reduced. 
B)  moral hazard costs of a group tend to move to a low average. 
C)  it is easier for the company to deny claims from a large group. 
D)  insuring a group eliminates the problem of buyers having more information than the seller. 
A)  the problem of adverse selection is reduced. 
B)  moral hazard costs of a group tend to move to a low average. 
C)  it is easier for the company to deny claims from a large group. 
D)  insuring a group eliminates the problem of buyers having more information than the seller.

Question 2

Briefly explain what you would expect to see happen to spending on health care over time, with health care being considered as a normal good.

Accepted Answer

With a normal good, as income

Question 3

Which of the following is not part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (ACA)?

Accepted Answer

A)  Individuals with pre-existing medical conditions are able to acquire health insurance. 
B)  All policies must provide coverage for dependant children up to age 26. 
C)  Lifetime dollar maximums on coverage are prohibited. 
D)  Limits on the size of deductibles and on waiting periods before coverage takes effect have been eliminated. 
A)  Individuals with pre-existing medical conditions are able to acquire health insurance. 
B)  All policies must provide coverage for dependant children up to age 26. 
C)  Lifetime dollar maximums on coverage are prohibited. 
D)  Limits on the size of deductibles and on waiting periods before coverage takes effect have been eliminated.

Question 4

The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction is known as asymmetric information.

Accepted Answer

A) True 
 B)False

Question 5

Figure 7-1   Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-1. The market equilibrium price is

Accepted Answer

A)  $30. 
B)  $25. 
C)  $20. 
D)  <$20. 
A)  $30. 
B)  $25. 
C)  $20. 
D)  <$20.

Question 6

Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Accepted Answer

A) True 
 B)False

Question 7

Insurance companies use deductibles and coinsurance to reduce moral hazard.

Accepted Answer

A) True 
 B)False

Question 8

In the market for insurance

Accepted Answer

A)  buyers often have more information than sellers. 
B)  sellers often have better information than buyers. 
C)  sellers are protected from lawsuits brought by buyers. 
D)  demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance. 
A)  buyers often have more information than sellers. 
B)  sellers often have better information than buyers. 
C)  sellers are protected from lawsuits brought by buyers. 
D)  demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance.

Question 9

Canada has a single-payer health care system in which the government provides national health insurance to all Canadian residents.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-5   Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 7-5. If consumers paid the full price of medical services, the price they would pay is

Accepted Answer

A)  $40. 
B)  $55. 
C)  $65. 
D)  > $65. 
A)  $40. 
B)  $55. 
C)  $65. 
D)  > $65.

Question 11

Doctors have ________ incentive to control their costs when consumers ________ for a visit to the doctor's office.

Accepted Answer

A)  more; only pay a deductible 
B)  less; only pay a deductible 
C)  less; pay entirely out of pocket 
D)  more; have a third-party payer that pays 
A)  more; only pay a deductible 
B)  less; only pay a deductible 
C)  less; pay entirely out of pocket 
D)  more; have a third-party payer that pays

Question 12

Substantial co-payments are typically not required as a part of the health care system in

Accepted Answer

A)  Canada and the United Kingdom. 
B)  Japan and Canada. 
C)  the United States and Japan. 
D)  Japan and the United Kingdom. 
A)  Canada and the United Kingdom. 
B)  Japan and Canada. 
C)  the United States and Japan. 
D)  Japan and the United Kingdom.

Question 13

Figure 7-4   Figure 7-4 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 7-4. The efficient quantity of medical services is

Accepted Answer

A)  200. 
B)  500. 
C)  700. 
D)  >700. 
A)  200. 
B)  500. 
C)  700. 
D)  >700.

Question 14

Since 1960, out-of-pocket spending on health care has increased sharply as a fraction of all health care spending.

Accepted Answer

A) True 
 B)False

Question 15

Figure 7-1   Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-1. At the market equilibrium

Accepted Answer

A)  the marginal social benefit is equal to the marginal cost. 
B)  the marginal social benefit is greater than the marginal cost. 
C)  the marginal social benefit is less than the marginal cost. 
D)  the marginal social benefit is zero. 
A)  the marginal social benefit is equal to the marginal cost. 
B)  the marginal social benefit is greater than the marginal cost. 
C)  the marginal social benefit is less than the marginal cost. 
D)  the marginal social benefit is zero.

Question 16

The health care system in Canada is referred to as ________, and is a system in which the government provides national health insurance to all Canadian residents.

Accepted Answer

A)  an out-of-pocket system 
B)  a single-payer health care system 
C)  a universal health insurance system 
D)  socialized medicine 
A)  an out-of-pocket system 
B)  a single-payer health care system 
C)  a universal health insurance system 
D)  socialized medicine

Question 17

How can improvements in health increase a country's total income?

Accepted Answer

Improvements in health make it possible

Question 18

About ________ of pharmaceutical patents are issued to U.S. firms.

Accepted Answer

A)  10 percent 
B)  one-half 
C)  two-thirds 
D)  90 percent 
A)  10 percent 
B)  one-half 
C)  two-thirds 
D)  90 percent

Question 19

Consumers usually pay less than the total cost of medical treatment because

Accepted Answer

A)  a third party, usually an insurance company, often pays most of the bill. 
B)  the federal government pays for most medical procedures. 
C)  competition forces doctors and hospitals to charge prices that do not cover their costs. 
D)  a third party, usually an employer, often pays most of the bill. 
A)  a third party, usually an insurance company, often pays most of the bill. 
B)  the federal government pays for most medical procedures. 
C)  competition forces doctors and hospitals to charge prices that do not cover their costs. 
D)  a third party, usually an employer, often pays most of the bill.

Question 20

Figure 7-1   Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-1. Marginal social benefit is represented by which curve?

Accepted Answer

A)  D1 
B)  D2 
C)  Supply 
D)  All of the above represent marginal social benefit. 
A)  D1 
B)  D2 
C)  Supply 
D)  All of the above represent marginal social benefit.

Exam 7: The Economics of Health Care

The cost of group health insurance is lower than if an individual buys a policy on his own because

Briefly explain what you would expect to see happen to spending on health care over time, with health care being considered as a normal good.

Which of the following is not part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (ACA)?

The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction is known as asymmetric information.

Figure 7-1 Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. -Refer to Figure 7-1. The market equilibrium price is

Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Insurance companies use deductibles and coinsurance to reduce moral hazard.

In the market for insurance

Canada has a single-payer health care system in which the government provides national health insurance to all Canadian residents.

Figure 7-5 Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. -Refer to Figure 7-5. If consumers paid the full price of medical services, the price they would pay is

Doctors have ________ incentive to control their costs when consumers ________ for a visit to the doctor's office.

Substantial co-payments are typically not required as a part of the health care system in

Figure 7-4 Figure 7-4 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. -Refer to Figure 7-4. The efficient quantity of medical services is

Since 1960, out-of-pocket spending on health care has increased sharply as a fraction of all health care spending.

Figure 7-1 Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. -Refer to Figure 7-1. At the market equilibrium

The health care system in Canada is referred to as ________, and is a system in which the government provides national health insurance to all Canadian residents.

How can improvements in health increase a country's total income?

About ________ of pharmaceutical patents are issued to U.S. firms.

Consumers usually pay less than the total cost of medical treatment because

Figure 7-1 Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. -Refer to Figure 7-1. Marginal social benefit is represented by which curve?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Doctors have incentive to control their costs when consumers for a visit to the doctor's office.