Question 1

The fee-for-service arrangement for paying doctors is one way to reduce health care costs.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the graph of a hypothetical market for health care. The efficiency loss caused by the provision of health insurance covering four-fifths of the cost is

Accepted Answer

A) $3,000. 
B) $6,000. 
C) $12,000. 
D) $24,000. 
A) $3,000. 
B) $6,000. 
C) $12,000. 
D) $24,000.

Question 3

One major difference between PPOs (preferred providers organizations)and HMOs (health maintenance organizations)is that

Accepted Answer

A) PPOs set rates for various medical services or procedures, while HMOs allow their doctors and clinics to set their own rates. 
B) PPOs seek to reduce health care costs by controlling prices, while HMOs seek to reduce costs by restricting quantity consumed. 
C) HMOs employ their own physicians or contract for specialized services with outside providers, while PPOs have arrangements with a network of providers. 
D) HMOs seek to reduce costs by capping the rates for various services, while PPOs seek to ration health care by having waiting periods. 
A) PPOs set rates for various medical services or procedures, while HMOs allow their doctors and clinics to set their own rates. 
B) PPOs seek to reduce health care costs by controlling prices, while HMOs seek to reduce costs by restricting quantity consumed. 
C) HMOs employ their own physicians or contract for specialized services with outside providers, while PPOs have arrangements with a network of providers. 
D) HMOs seek to reduce costs by capping the rates for various services, while PPOs seek to ration health care by having waiting periods.

Question 4

The table shows the hypothetical demand and supply schedule for health care. The efficiency loss caused by the availability of health insurance paying one-third of the cost is

Accepted Answer

A) $400. 
B) $75,000. 
C) $15,000. 
D) $100. 
A) $400. 
B) $75,000. 
C) $15,000. 
D) $100.

Question 5

All other things equal, greater popularity of the view that health care is a right will

Accepted Answer

A) increase the demand for health care. 
B) decrease the demand for health care. 
C) increase the supply of health care. 
D) decrease the supply of health care. 
A) increase the demand for health care. 
B) decrease the demand for health care. 
C) increase the supply of health care. 
D) decrease the supply of health care.

Question 6

If the provision of medical insurance encourages people to take more health risks because they know they can receive treatment, then health insurance

Accepted Answer

A) produces an asymmetric information problem. 
B) leads to a universal access problem. 
C) causes a defensive medicine problem. 
D) creates a moral hazard problem. 
A) produces an asymmetric information problem. 
B) leads to a universal access problem. 
C) causes a defensive medicine problem. 
D) creates a moral hazard problem.

Question 7

Assume that health insurance pays three-fourths of the cost of health care. Under this type of system, there will be allocative

Accepted Answer

A) efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society equals the marginal benefit. 
B) efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost. 
C) inefficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society exceeds the marginal benefit. 
D) inefficiency because consumers pay a price above market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost. 
A) efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society equals the marginal benefit. 
B) efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost. 
C) inefficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society exceeds the marginal benefit. 
D) inefficiency because consumers pay a price above market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost.

Question 8

The demand for health care is highly elastic with respect to both price and income.

Accepted Answer

A) True 
 B)False

Question 9

Health care costs have tended to rise more rapidly in the United States than in Canada because

Accepted Answer

A) state insurance regulators in the United States do not face the budget constraints that national regulators in Canada face. 
B) people in the United States want more health care than people in Canada. 
C) private insurance in the United States encourages overconsumption of health care; public insurance in Canada does not. 
D) Canada has better achieved economies of scale in the production of health care. 
A) state insurance regulators in the United States do not face the budget constraints that national regulators in Canada face. 
B) people in the United States want more health care than people in Canada. 
C) private insurance in the United States encourages overconsumption of health care; public insurance in Canada does not. 
D) Canada has better achieved economies of scale in the production of health care.

Question 10

The dollar sum of costs that an insured individual must pay before the insurer begins to pay would be considered

Accepted Answer

A) copayments. 
B) play-or-pay. 
C) fee for service. 
D) deductibles. 
A) copayments. 
B) play-or-pay. 
C) fee for service. 
D) deductibles.

Question 11

Refer to the graph of a hypothetical market for health care. Assume that health insurance pays four-fifths of the cost of health care. The consumer will end up consuming how many units of health care and pay (out-of-pocket)how much for it per unit?

Accepted Answer

A) 600 units, for $20 per unit 
B) 450 units, for $40 per unit 
C) 300 units, for $60 per unit 
D) 450 units, for $80 per unit 
A) 600 units, for $20 per unit 
B) 450 units, for $40 per unit 
C) 300 units, for $60 per unit 
D) 450 units, for $80 per unit

Question 12

Which of the following constituted the largest share of total health care spending in 2017?

Accepted Answer

A) physicians 
B) hospitals 
C) nursing homes 
D) prescription drugs 
A) physicians 
B) hospitals 
C) nursing homes 
D) prescription drugs

Question 13

Explain how changes in incomes contribute to increasing health care costs.

Accepted Answer

Because health care is a normal good, in

Question 14

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Accepted Answer

A) the free-rider problem. 
B) the moral hazard problem. 
C) the adverse selection problem. 
D) the Coase theorem. 
A) the free-rider problem. 
B) the moral hazard problem. 
C) the adverse selection problem. 
D) the Coase theorem.

Question 15

Roughly how much of health care spending in the U.S. in 2017 was financed by private and public insurance?

Accepted Answer

A) 20 percent 
B) 41 percent 
C) 60 percent 
D) 75 percent 
A) 20 percent 
B) 41 percent 
C) 60 percent 
D) 75 percent

Question 16

Health care spending was about what percentage of U.S. GDP in 2017?

Accepted Answer

A) 45 percent 
B) 32 percent 
C) 18 percent 
D) 8 percent 
A) 45 percent 
B) 32 percent 
C) 18 percent 
D) 8 percent

Question 17

When the United States is described as having a dual system of health care, this means that

Accepted Answer

A) government provides basic health insurance for all Americans and private insurance covers services beyond the basic level. 
B) high-quality care is provided in urban areas, but care in rural areas is of poor quality. 
C) those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care. 
D) the high-risk segment of the population is required to have health insurance, while the low-risk sector is not. 
A) government provides basic health insurance for all Americans and private insurance covers services beyond the basic level. 
B) high-quality care is provided in urban areas, but care in rural areas is of poor quality. 
C) those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care. 
D) the high-risk segment of the population is required to have health insurance, while the low-risk sector is not.

Question 18

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 remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be

Accepted Answer

A) 10,000. 
B) 16,000. 
C) 13,000. 
D) 20,000. 
A) 10,000. 
B) 16,000. 
C) 13,000. 
D) 20,000.

Question 19

Refer to the diagram, which shows the market for U.S. health care. Other things equal, which of the following would shift the demand curve for medical care from D₁ to D₂?

Accepted Answer

A) higher copayments and deductibles in insurance policies 
B) an aging population 
C) cutbacks in the government's Medicaid program 
D) restrictions by firms on the eligibility of part-time workers for medical benefits 
A) higher copayments and deductibles in insurance policies 
B) an aging population 
C) cutbacks in the government's Medicaid program 
D) restrictions by firms on the eligibility of part-time workers for medical benefits

Question 20

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

Accepted Answer

A) True 
 B)False

Exam 24: Health Care

The fee-for-service arrangement for paying doctors is one way to reduce health care costs.

Refer to the graph of a hypothetical market for health care. The efficiency loss caused by the provision of health insurance covering four-fifths of the cost is

One major difference between PPOs (preferred providers organizations)and HMOs (health maintenance organizations)is that

The table shows the hypothetical demand and supply schedule for health care. The efficiency loss caused by the availability of health insurance paying one-third of the cost is

All other things equal, greater popularity of the view that health care is a right will

If the provision of medical insurance encourages people to take more health risks because they know they can receive treatment, then health insurance

Assume that health insurance pays three-fourths of the cost of health care. Under this type of system, there will be allocative

The demand for health care is highly elastic with respect to both price and income.

Health care costs have tended to rise more rapidly in the United States than in Canada because

The dollar sum of costs that an insured individual must pay before the insurer begins to pay would be considered

Refer to the graph of a hypothetical market for health care. Assume that health insurance pays four-fifths of the cost of health care. The consumer will end up consuming how many units of health care and pay (out-of-pocket)how much for it per unit?

Which of the following constituted the largest share of total health care spending in 2017?

Explain how changes in incomes contribute to increasing health care costs.

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Roughly how much of health care spending in the U.S. in 2017 was financed by private and public insurance?

Health care spending was about what percentage of U.S. GDP in 2017?

When the United States is described as having a dual system of health care, this means that

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 remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be

Refer to the diagram, which shows the market for U.S. health care. Other things equal, which of the following would shift the demand curve for medical care from D₁ to D₂?

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

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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