Question 1

Life expectancy at birth in the United States has more than doubled since 1850.

Accepted Answer

A) True 
 B)False

Question 2

One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no asymmetric information problems.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are part of the "individual mandate" provision of the Patient Protection and Affordable Care Act (ACA)except

Accepted Answer

A) individuals were allowed to opt out of the insurance program if they could prove they had no serious health issues and did so before the act fully took effect in the year 2014. 
B) in 2017, fines for not having health insurance are the greater of $695 per person or 2.5 percent of income. 
C) individuals who do not acquire health insurance will be subject to a fine. 
D) with limited exceptions, every resident of the United States will be required to have health insurance that meets certain basic requirements. 
A) individuals were allowed to opt out of the insurance program if they could prove they had no serious health issues and did so before the act fully took effect in the year 2014. 
B) in 2017, fines for not having health insurance are the greater of $695 per person or 2.5 percent of income. 
C) individuals who do not acquire health insurance will be subject to a fine. 
D) with limited exceptions, every resident of the United States will be required to have health insurance that meets certain basic requirements.

Question 4

In markets with asymmetric information,

Accepted Answer

A) moral hazard causes adverse selection which in turn causes asymmetric information. 
B) adverse selection causes moral hazard which in turn causes asymmetric information. 
C) asymmetric information causes moral hazard and then it causes adverse selection. 
D) asymmetric information causes adverse selection and then it causes moral hazard. 
A) moral hazard causes adverse selection which in turn causes asymmetric information. 
B) adverse selection causes moral hazard which in turn causes asymmetric information. 
C) asymmetric information causes moral hazard and then it causes adverse selection. 
D) asymmetric information causes adverse selection and then it causes moral hazard.

Question 5

Between 1981 and 2015, deaths from cancer have increased in the United States.

Accepted Answer

A) True 
 B)False

Question 6

The health care system in the United Kingdom is referred to as ________, under which the government owns most of the hospitals and employs most of the doctors.

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 7

Suppose a large firm allows its employees to choose whether to participate in its health insurance plan.The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible, and Plan II has a high monthly premium but a low deductible.Under which plan is adverse selection likely to be a bigger problem?

Accepted Answer

A) Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect. 
A) Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect.

Question 8

Of the following high-income countries, which has the highest number of CT scanners per 1 million population?

Accepted Answer

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

Question 9

Of the following high-income countries, which has the lowest number of MRI units per 1 million population?

Accepted Answer

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

Question 10

Which of the following reforms could potentially reduce spending on health care without reducing the effectiveness of health care received?

Accepted Answer

A) nationalize health care so that all health services are government funded and operated 
B) give every citizen a fixed amount of money that can only be spent on health care services 
C) reimburse consumers for preventive health care expenditures so as to avoid costly emergency medical treatments in the future 
D) standardize the tax treatment of employer-based health insurance benefits and private spending on health care 
A) nationalize health care so that all health services are government funded and operated 
B) give every citizen a fixed amount of money that can only be spent on health care services 
C) reimburse consumers for preventive health care expenditures so as to avoid costly emergency medical treatments in the future 
D) standardize the tax treatment of employer-based health insurance benefits and private spending on health care

Question 11

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 12

In which of the following countries are substantial co-payments typically required as a part of the health care system?

Accepted Answer

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

Question 13

Over the past 165 years in the United States, life expectancy

Accepted Answer

A) has remained fairly constant. 
B) has slightly declined. 
C) has more than doubled. 
D) increased up to the 1950s and then declined for the next 60 years. 
A) has remained fairly constant. 
B) has slightly declined. 
C) has more than doubled. 
D) increased up to the 1950s and then declined for the next 60 years.

Question 14

Which of the following is a part of the "employer mandate" provision of the Patient Protection and Affordable Care Act (ACA)?

Accepted Answer

A) Every firm with more than 3 full-time employees must offer health insurance to its employees and must automatically enroll them in the plan. 
B) Small businesses with fewer than 50 employees are exempt from being required to participate in the program. 
C) Firms with 50 or more full-time employees must offer health insurance or pay a fee up to $3,390 to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace. 
D) Every resident of the United States must have health insurance that meets certain basic requirements. 
A) Every firm with more than 3 full-time employees must offer health insurance to its employees and must automatically enroll them in the plan. 
B) Small businesses with fewer than 50 employees are exempt from being required to participate in the program. 
C) Firms with 50 or more full-time employees must offer health insurance or pay a fee up to $3,390 to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace. 
D) Every resident of the United States must have health insurance that meets certain basic requirements.

Question 15

Suppose you see a 2006 Scion xB Sport Wagon advertised in the local newspaper for $4,500.If you knew the car was reliable, you would be willing to pay $6,000 for it.If you knew the car was unreliable, you would only be willing to pay $2,500 for it.Under what circumstances should you buy the car at the asking price?

Accepted Answer

Because of the lemons problem you should

Question 16

If a state requires all drivers to purchase auto insurance, insurance companies still face the problem of

Accepted Answer

A) correctly pricing their insurance. 
B) sunk costs. 
C) adverse selection. 
D) excess demand for their insurance. 
A) correctly pricing their insurance. 
B) sunk costs. 
C) adverse selection. 
D) excess demand for their insurance.

Question 17

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of

Accepted Answer

A) moral hazard. 
B) adverse selection. 
C) asymmetric information. 
D) economic irrationality. 
A) moral hazard. 
B) adverse selection. 
C) asymmetric information. 
D) economic irrationality.

Question 18

In a market with positive externalities, the market equilibrium price will be less than the efficient equilibrium price.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an advantage to an insurance company of insuring a large group of people for health insurance?

Accepted Answer

A) The characteristics of a large group are likely to reflect those of the entire population. 
B) It is easier to accurately predict the number of claims for a group than for an individual. 
C) When all group members pay the premium, the problem of moral hazard is reduced. 
D) When all group members pay the premium, the problem of adverse selection is reduced. 
A) The characteristics of a large group are likely to reflect those of the entire population. 
B) It is easier to accurately predict the number of claims for a group than for an individual. 
C) When all group members pay the premium, the problem of moral hazard is reduced. 
D) When all group members pay the premium, the problem of adverse selection is reduced.

Question 20

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services.This would tend to ________ economic efficiency by ________ the costs of medical services

Accepted Answer

A) increase; increasing 
B) increase; decreasing 
C) decrease; increasing 
D) decrease; decreasing 
A) increase; increasing 
B) increase; decreasing 
C) decrease; increasing 
D) decrease; decreasing

Life expectancy at birth in the United States has more than doubled since 1850.

One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no asymmetric information problems.

All of the following are part of the "individual mandate" provision of the Patient Protection and Affordable Care Act (ACA)except

In markets with asymmetric information,

Between 1981 and 2015, deaths from cancer have increased in the United States.

The health care system in the United Kingdom is referred to as ________, under which the government owns most of the hospitals and employs most of the doctors.

Of the following high-income countries, which has the highest number of CT scanners per 1 million population?

Of the following high-income countries, which has the lowest number of MRI units per 1 million population?

Which of the following reforms could potentially reduce spending on health care without reducing the effectiveness of health care received?

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

In which of the following countries are substantial co-payments typically required as a part of the health care system?

Over the past 165 years in the United States, life expectancy

Which of the following is a part of the "employer mandate" provision of the Patient Protection and Affordable Care Act (ACA)?

If a state requires all drivers to purchase auto insurance, insurance companies still face the problem of

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of

In a market with positive externalities, the market equilibrium price will be less than the efficient equilibrium price.

Which of the following is not an advantage to an insurance company of insuring a large group of people for health insurance?

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services.This would tend to economic efficiency by the costs of medical services

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

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

Filters

Exam 7: The Economics of Health Care

Life expectancy at birth in the United States has more than doubled since 1850.

One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no asymmetric information problems.

All of the following are part of the "individual mandate" provision of the Patient Protection and Affordable Care Act (ACA)except

In markets with asymmetric information,

Between 1981 and 2015, deaths from cancer have increased in the United States.

The health care system in the United Kingdom is referred to as ________, under which the government owns most of the hospitals and employs most of the doctors.

Of the following high-income countries, which has the highest number of CT scanners per 1 million population?

Of the following high-income countries, which has the lowest number of MRI units per 1 million population?

Which of the following reforms could potentially reduce spending on health care without reducing the effectiveness of health care received?

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

In which of the following countries are substantial co-payments typically required as a part of the health care system?

Over the past 165 years in the United States, life expectancy

Which of the following is a part of the "employer mandate" provision of the Patient Protection and Affordable Care Act (ACA)?

If a state requires all drivers to purchase auto insurance, insurance companies still face the problem of

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of

In a market with positive externalities, the market equilibrium price will be less than the efficient equilibrium price.

Which of the following is not an advantage to an insurance company of insuring a large group of people for health insurance?

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services.This would tend to ________ economic efficiency by ________ the costs of medical services

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

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

Filters

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services.This would tend to economic efficiency by the costs of medical services