Question 1

Purchasing additional medical services because you are covered by health insurance is an illustration of

Accepted Answer

A) The adverse selection problem 
B) The moral hazard problem 
C) A failure of the market for externalities 
D) The existence of spillover benefits 
A) The adverse selection problem 
B) The moral hazard problem 
C) A failure of the market for externalities 
D) The existence of spillover benefits B

Question 2

As it applies to health insurance,the adverse selection problem is the tendency for:

Accepted Answer

A) Those most likely to collect on insurance,i.e.,sick people,to buy it. 
B) Those who buy insurance to take less precaution in avoiding illness. 
C) Sellers to price-discriminate. 
D) Sellers to restrict output and charge high prices. 
A) Those most likely to collect on insurance,i.e.,sick people,to buy it. 
B) Those who buy insurance to take less precaution in avoiding illness. 
C) Sellers to price-discriminate. 
D) Sellers to restrict output and charge high prices. A

Question 3

Insurance coverage is sold at

Accepted Answer

A) The actuarially fair price 
B) The pure premium 
C) The loading fee 
D) The actuarially fair price + the loading fee 
A) The actuarially fair price 
B) The pure premium 
C) The loading fee 
D) The actuarially fair price + the loading fee D

Question 4

Suppose there are two types of people in an insurance market: high and low risks.The high-risk person is sick 10% of the time and the low-risk person is sick 5% of the time.The probability of any individual being high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.If the insurer cannot distinguish between the two types,but the two individuals know their types,what will be the equilibrium premium?

Accepted Answer

This is an example of the lemons.If the

Question 5

Suppose there are two types of people in an insurance market: high and low risks.The high-risk person is sick 10% of the time and the low-risk person is sick 5% of the time.The probability of any individual being high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.What if the individuals do not know their type?

Accepted Answer

If neither the insurer nor the patients

Question 6

It is flu season,and you are trying to decide if you should get a flu shot.When you are healthy,you earn $144 a day,but if you become ill,you will only earn $100 a day.There is a 25% chance you will get the flu without a flu shot.If you do receive the flu shot,then you definitely will not get the flu.What is the actuarially fair price for the flu shot given this information?

Accepted Answer

A) $44 
B) $33 
C) $22 
D) $11 
A) $44 
B) $33 
C) $22 
D) $11

Question 7

Suppose there are two types of people in an insurance market: high and low risks.The high-risk person is sick 10% of the time and the low-risk person is sick 5% of the time.The probability that any individual is high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.What are the actuarially fair premiums for the types?

Accepted Answer

The actuarially fair premiums are equiva

Question 8

For a risk-averse consumer

Accepted Answer

A) The expected utility of wealth is greater than the utility of expected wealth 
B) The expected utility of wealth is equal to the utility of expected wealth 
C) The expected utility of wealth is less than the utility of expected wealth 
D) There is no relationship between the expected utility of wealth and the utility of expected wealth 
A) The expected utility of wealth is greater than the utility of expected wealth 
B) The expected utility of wealth is equal to the utility of expected wealth 
C) The expected utility of wealth is less than the utility of expected wealth 
D) There is no relationship between the expected utility of wealth and the utility of expected wealth

Question 9

A public option in the health insurance market has been proposed as a remedy to the increasing cost of health care.Critics state that a public option requiring all citizens to purchase health insurance would decrease health insurance premiums on average by mitigating

Accepted Answer

A) The adverse selection problem 
B) The moral hazard problem 
C) A failure of the market for externalities 
D) The existence of spillover benefits 
A) The adverse selection problem 
B) The moral hazard problem 
C) A failure of the market for externalities 
D) The existence of spillover benefits

Question 10

In the figure, the change in insurance coverage causes a social welfare loss equal to:

Accepted Answer

A) 100 
B) 60 
C) 40 
D) 20 
A) 100 
B) 60 
C) 40 
D) 20

Question 11

Calculate the expected return (or expected winnings)in a game where a person wins $1 with the probability of 1/3 ,$5 with the probability of1/6 ,and $0 with the probability of 1/2 .

Accepted Answer

A) 0 
B) $1 1 / 6 
C) $2 1 / 6 
D) $3 
A) 0 
B) $1 1 / 6 
C) $2 1 / 6 
D) $3

Question 12

Use the following figure for questions 8 through 10
 
Suppose that Q₀ = 10 office visits,Q₁ = 20 office visits,P₀ = 10,and P₁ = 2.The increased expenditures due to insurance are:

Accepted Answer

A) $50 
B) $100 
C) $200 
D) $300 
A) $50 
B) $100 
C) $200 
D) $300

Question 13

In the figure above, the change in insurance coverage causes a consumer's private benefits to increase (area under the demand curve) by:

Accepted Answer

A) 120 
B) 90 
C) 60 
D) 30 
A) 120 
B) 90 
C) 60 
D) 30

Question 14

When an insurer promises to pay 30% of treatment costs,this amount is known as a

Accepted Answer

A) Deductible 
B) Co-insurance 
C) Stop-loss 
D) Lifetime maximum 
A) Deductible 
B) Co-insurance 
C) Stop-loss 
D) Lifetime maximum

Question 15

Which of the following policies limits the extent of moral hazard in the health insurance market?

Accepted Answer

A) Stop loss 
B) Large deductibles 
C) Varying co-insurance rates 
D) All of the above 
E) None of the above 
A) Stop loss 
B) Large deductibles 
C) Varying co-insurance rates 
D) All of the above 
E) None of the above

Question 16

It is flu season.When you are healthy,you will earn $144 a day,but if you become ill,you will only earn $100 a day.There is a 25% chance you will get the flu.If your utility function is equal to   where W is equal to wealth,then what is your expected utility of catching the flu?

Accepted Answer

A) $133 
B) $111 
C) $11.5 
D) $10.5 
A) $133 
B) $111 
C) $11.5 
D) $10.5

Question 17

In the figure below: By how much do expenditures increase with insurance? What is the deadweight loss to society for insurance?

Accepted Answer

Originally,expenditures are equal to (80

Question 18

Suppose the inverse demand for physician office visits is P = 1000 - 20Q.Now suppose an insurance policy provides a co-insurance rate of 50%.Graph the new demand function with health insurance.

Accepted Answer

The answer of Suppose the inverse demand for physician office...

Question 19

Lucy Ramirez has $22,500 in income.After a recent trip to Cuba,she discovers that there is a 25% chance of acquiring Cubanitis.The disease is 100% curable but requires the Fidelonomy procedure (at a cost of $12,500).The Kuba-Kuba Insurance Company offers a policy that will cover the Fidelonomy.The premium they charge is $4,000.Of this premium,the pure premium is __________ and the loading fee is _______.

Accepted Answer

A) $4,000;$0 
B) $3,125;$875 
C) $875;$3125 
D) Not enough information to answer. 
A) $4,000;$0 
B) $3,125;$875 
C) $875;$3125 
D) Not enough information to answer.

Question 20

Which of the following types of reimbursement would hospitals support?

Accepted Answer

A) Indemnity benefit 
B) Service-benefit 
C) Both a and b 
D) Neither a nor b 
A) Indemnity benefit 
B) Service-benefit 
C) Both a and b 
D) Neither a nor b

Purchasing additional medical services because you are covered by health insurance is an illustration of

As it applies to health insurance,the adverse selection problem is the tendency for:

Insurance coverage is sold at

For a risk-averse consumer

A public option in the health insurance market has been proposed as a remedy to the increasing cost of health care.Critics state that a public option requiring all citizens to purchase health insurance would decrease health insurance premiums on average by mitigating

In the figure, the change in insurance coverage causes a social welfare loss equal to:

Calculate the expected return (or expected winnings)in a game where a person wins $1 with the probability of 1/3 ,$5 with the probability of1/6 ,and $0 with the probability of 1/2 .

Use the following figure for questions 8 through 10 Suppose that Q₀ = 10 office visits,Q₁ = 20 office visits,P₀ = 10,and P₁ = 2.The increased expenditures due to insurance are:

In the figure above, the change in insurance coverage causes a consumer's private benefits to increase (area under the demand curve) by:

When an insurer promises to pay 30% of treatment costs,this amount is known as a

Which of the following policies limits the extent of moral hazard in the health insurance market?

It is flu season.When you are healthy,you will earn $144 a day,but if you become ill,you will only earn $100 a day.There is a 25% chance you will get the flu.If your utility function is equal to where W is equal to wealth,then what is your expected utility of catching the flu?

In the figure below: By how much do expenditures increase with insurance? What is the deadweight loss to society for insurance?

Suppose the inverse demand for physician office visits is P = 1000 - 20Q.Now suppose an insurance policy provides a co-insurance rate of 50%.Graph the new demand function with health insurance.

Which of the following types of reimbursement would hospitals support?

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Market for Health Insurance: Its Performance and Structure

The Physician Services Market

The Market for Hospital Services

The Pharmaceutical Industry

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

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Exam 7: The Demand for Health Insurance

Purchasing additional medical services because you are covered by health insurance is an illustration of

As it applies to health insurance,the adverse selection problem is the tendency for:

Insurance coverage is sold at

For a risk-averse consumer

A public option in the health insurance market has been proposed as a remedy to the increasing cost of health care.Critics state that a public option requiring all citizens to purchase health insurance would decrease health insurance premiums on average by mitigating

In the figure, the change in insurance coverage causes a social welfare loss equal to:

Calculate the expected return (or expected winnings)in a game where a person wins $1 with the probability of 1/3 ,$5 with the probability of1/6 ,and $0 with the probability of 1/2 .

Use the following figure for questions 8 through 10 Suppose that Q₀ = 10 office visits,Q₁ = 20 office visits,P₀ = 10,and P₁ = 2.The increased expenditures due to insurance are:

In the figure above, the change in insurance coverage causes a consumer's private benefits to increase (area under the demand curve) by:

When an insurer promises to pay 30% of treatment costs,this amount is known as a

Which of the following policies limits the extent of moral hazard in the health insurance market?

It is flu season.When you are healthy,you will earn $144 a day,but if you become ill,you will only earn $100 a day.There is a 25% chance you will get the flu.If your utility function is equal to where W is equal to wealth,then what is your expected utility of catching the flu?

In the figure below: By how much do expenditures increase with insurance? What is the deadweight loss to society for insurance?

Suppose the inverse demand for physician office visits is P = 1000 - 20Q.Now suppose an insurance policy provides a co-insurance rate of 50%.Graph the new demand function with health insurance.

Which of the following types of reimbursement would hospitals support?

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Market for Health Insurance: Its Performance and Structure

The Physician Services Market

The Market for Hospital Services

The Pharmaceutical Industry

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

Filters