Question 1

It is generally agreed that in the long run the cost of private health insurance provided by employers is

Accepted Answer

A) at the expense of business profits. 
B) at the expense of real wages. 
C) paid by taxpayers through government. 
D) included as taxable income for income tax purposes. 
A) at the expense of business profits. 
B) at the expense of real wages. 
C) paid by taxpayers through government. 
D) included as taxable income for income tax purposes.

Question 2

One special feature about health care services is that society regards them as

Accepted Answer

A) private goods. 
B) an entitlement. 
C) something to be rationed by price and ability to pay. 
D) normal goods. 
A) private goods. 
B) an entitlement. 
C) something to be rationed by price and ability to pay. 
D) normal goods.

Question 3

Out-of-pocket costs of health care to consumers are mostly in the form of

Accepted Answer

A) premiums and copayments. 
B) health taxes and premiums. 
C) premiums and deductibles. 
D) copayments and deductibles. 
A) premiums and copayments. 
B) health taxes and premiums. 
C) premiums and deductibles. 
D) copayments and deductibles.

Question 4

Raising the deductibles and copayments is a way of dealing with the

Accepted Answer

A) adverse selection problem of health insurance 
B) moral hazard problem of health insurance. 
C) asymmetric information between doctors and patients. 
D) externalities of health care. 
A) adverse selection problem of health insurance 
B) moral hazard problem of health insurance. 
C) asymmetric information between doctors and patients. 
D) externalities of health care.

Question 5

Managed-care organizations attempt to control their enrolled members' use of health care as a way of containing costs.

Accepted Answer

A) True 
 B)False

Question 6

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

Accepted Answer

A) reducing the coverage of insured illnesses. 
B) high out-of-pocket costs to consumers. 
C) raising the health-insurance premiums. 
D) privatizing health insurance. 
A) reducing the coverage of insured illnesses. 
B) high out-of-pocket costs to consumers. 
C) raising the health-insurance premiums. 
D) privatizing health insurance.

Question 7

When economists say that health care services are overconsumed, they mean that

Accepted Answer

A) rich people buy too much health care and poor people buy too little. 
B) some resources now used in the health care industry could produce alternative goods and services that society values more highly. 
C) health care is being purchased in amounts such that marginal benefits exceed marginal costs. 
D) the price of health care is below equilibrium so that quantity demanded exceeds quantity supplied. 
A) rich people buy too much health care and poor people buy too little. 
B) some resources now used in the health care industry could produce alternative goods and services that society values more highly. 
C) health care is being purchased in amounts such that marginal benefits exceed marginal costs. 
D) the price of health care is below equilibrium so that quantity demanded exceeds quantity supplied.

Question 8

The increased practice of "defensive medicine" is a consequence of

Accepted Answer

A) professional board licensing requirements. 
B) the threat of medical lawsuits. 
C) incentives given by drug companies. 
D) an Act passed by Congress. 
A) professional board licensing requirements. 
B) the threat of medical lawsuits. 
C) incentives given by drug companies. 
D) an Act passed by Congress.

Question 9

"Defensive medicine" means the same thing as "preventive medicine."

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a provision of the Patient Protection and Affordable Care Act?

Accepted Answer

A) Insurance companies may not legally deny coverage to anyone on the basis of a preexisting medical condition. 
B) Every firm must purchase health insurance for their employees or face a $2,000 fine per employee. 
C) Every individual must purchase their own health insurance for themselves and their dependents or pay a fine. 
D) Adult children of parents with employer-provided health insurance can remain covered by their parents' insurance through age 35. 
A) Insurance companies may not legally deny coverage to anyone on the basis of a preexisting medical condition. 
B) Every firm must purchase health insurance for their employees or face a $2,000 fine per employee. 
C) Every individual must purchase their own health insurance for themselves and their dependents or pay a fine. 
D) Adult children of parents with employer-provided health insurance can remain covered by their parents' insurance through age 35.

Question 11

The main purpose of HMOs and PPOs is to

Accepted Answer

A) reduce health care costs for employers and their employees. 
B) reduce medical malpractice suits. 
C) enable groups of physicians to increase their fees. 
D) direct patients to specialists rather than to more expensive primary-care physicians. 
A) reduce health care costs for employers and their employees. 
B) reduce medical malpractice suits. 
C) enable groups of physicians to increase their fees. 
D) direct patients to specialists rather than to more expensive primary-care physicians.

Question 12

Roughly what portion of U.S. total health spending is paid for by private and public insurance?

Accepted Answer

A) one-tenth 
B) one-fourth 
C) four-fifths 
D) one-half 
A) one-tenth 
B) one-fourth 
C) four-fifths 
D) one-half

Question 13

Refer to the demand and supply diagram, which relates to the health care market. The efficiency loss caused by the availability of health insurance is shown by area

Accepted Answer

A) P₁ abP₂. 
B) abc. 
C) adc. 
D) Q₁ acQ₂. 
A) P₁ abP₂. 
B) abc. 
C) adc. 
D) Q₁ acQ₂.

Question 14

Employer-provided private health insurance

Accepted Answer

A) is unique to the United States and not typically found in other countries. 
B) is the most common form of health care provision in industrialized countries. 
C) substantially reduces the cost of health care provision relative to national health insurance schemes. 
D) provides a small percentage of health care spending in the United States. 
A) is unique to the United States and not typically found in other countries. 
B) is the most common form of health care provision in industrialized countries. 
C) substantially reduces the cost of health care provision relative to national health insurance schemes. 
D) provides a small percentage of health care spending in the United States.

Question 15

Sam decides to join the Gigantic State University's rugby team when he learns that his health insurance will pay for any subsequent injury. This illustrates

Accepted Answer

A) the diagnosis-related-group system. 
B) a "pay or play" system. 
C) the moral hazard problem. 
D) the Coase theorem. 
A) the diagnosis-related-group system. 
B) a "pay or play" system. 
C) the moral hazard problem. 
D) the Coase theorem.

Question 16

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

Accepted Answer

A) efficiency because, at 7,000 units, the marginal cost to society of $3,000 equals the marginal benefit of $3,000. 
B) efficiency because, at 12,000 units, the marginal cost to society is $4,000 and the marginal benefit is $1,000. 
C) inefficiency because, at 12,000 units, the marginal cost to society is $5,000 and the marginal benefit is $2,000. 
D) inefficiency because, at 12,000 units, the marginal cost to society is $2,000 and the marginal benefit is $5,000. 
A) efficiency because, at 7,000 units, the marginal cost to society of $3,000 equals the marginal benefit of $3,000. 
B) efficiency because, at 12,000 units, the marginal cost to society is $4,000 and the marginal benefit is $1,000. 
C) inefficiency because, at 12,000 units, the marginal cost to society is $5,000 and the marginal benefit is $2,000. 
D) inefficiency because, at 12,000 units, the marginal cost to society is $2,000 and the marginal benefit is $5,000.

Question 17

When the supplier, not the buyer, of health care services makes most of the decisions about the amount and type of health care to be provided, there is

Accepted Answer

A) a moral hazard in the health care market. 
B) asymmetric information in the health care market. 
C) a lack of medical ethics in the health care market. 
D) a need for Medicare in the health care market. 
A) a moral hazard in the health care market. 
B) asymmetric information in the health care market. 
C) a lack of medical ethics in the health care market. 
D) a need for Medicare in the health care market.

Question 18

Asymmetric information in the health care market has increased the supply of health care.

Accepted Answer

A) True 
 B)False

Question 19

Whole Foods Market's personal wellness accounts for employees

Accepted Answer

A) create significant moral hazard in the purchase of health care services. 
B) provide bonus payments for employees meeting certain health criteria and participating in company wellness activities. 
C) encourage employees to consider the opportunity costs of their medical spending. 
D) encourage employees to overspend for health care, as they view it as "free money." 
A) create significant moral hazard in the purchase of health care services. 
B) provide bonus payments for employees meeting certain health criteria and participating in company wellness activities. 
C) encourage employees to consider the opportunity costs of their medical spending. 
D) encourage employees to overspend for health care, as they view it as "free money."

Question 20

A tax subsidy is involved in employer-financed health insurance because

Accepted Answer

A) all working adults are covered by Medicare. 
B) all working adults are covered by Medicaid. 
C) employer payments for health insurance are not subject to income or payroll taxes. 
D) corporations that provide health insurance pay lower corporate income tax rates. 
A) all working adults are covered by Medicare. 
B) all working adults are covered by Medicaid. 
C) employer payments for health insurance are not subject to income or payroll taxes. 
D) corporations that provide health insurance pay lower corporate income tax rates.

Exam 24: Health Care

It is generally agreed that in the long run the cost of private health insurance provided by employers is

One special feature about health care services is that society regards them as

Out-of-pocket costs of health care to consumers are mostly in the form of

Raising the deductibles and copayments is a way of dealing with the

Managed-care organizations attempt to control their enrolled members' use of health care as a way of containing costs.

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

When economists say that health care services are overconsumed, they mean that

The increased practice of "defensive medicine" is a consequence of

"Defensive medicine" means the same thing as "preventive medicine."

Which of the following is a provision of the Patient Protection and Affordable Care Act?

The main purpose of HMOs and PPOs is to

Roughly what portion of U.S. total health spending is paid for by private and public insurance?

Refer to the demand and supply diagram, which relates to the health care market. The efficiency loss caused by the availability of health insurance is shown by area

Employer-provided private health insurance

Sam decides to join the Gigantic State University's rugby team when he learns that his health insurance will pay for any subsequent injury. This illustrates

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

When the supplier, not the buyer, of health care services makes most of the decisions about the amount and type of health care to be provided, there is

Asymmetric information in the health care market has increased the supply of health care.

Whole Foods Market's personal wellness accounts for employees

A tax subsidy is involved in employer-financed health insurance because

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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