Question 1

Over the last 25 years,the number of for-profit hospitals has

Accepted Answer

A) Exceeded the number of nonprofit hospitals 
B) Has declined relative to nonprofit hospitals 
C) Has increased by more than 50% 
D) Has increased by less than 50% 
A) Exceeded the number of nonprofit hospitals 
B) Has declined relative to nonprofit hospitals 
C) Has increased by more than 50% 
D) Has increased by less than 50% D

Question 2

Explain why a hospital can be considered a multiproduct firm.

Accepted Answer

A hospital can be seen as a conglomerate of different physician services.For example,a hospital can provide both obstetrics services and CABG procedures.The firm must select a series of prices for each one of its services.Further,each service may face a different definition of the market.Obstetrics may have more localized competition from smaller community hospitals,but CABG services may need to look at the regional market.

Question 3

What are the determinants of a geographic market?

Accepted Answer

Conceptually,the relevant geographic market would include: first,suppliers who are currently in the market;second,those firms in the market not currently providing the service but who could add that service in a reasonable time period;third,suppliers not in the market but who are capable of entering the market within a reasonable time;and fourth,the patient's willingness to travel to other suppliers of the service.All these determinants define the geographic market.

Question 4

You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services.Your research indicates that the income elasticity of demand for the target market is +0.50;the price elasticity of demand is -0.15;and the cross-price elasticity of demand with respect to the price of services at Rural Hospital,a near-by hospital,is +0.35.Answer the following questions.
The price of services at Rural Hospital falls by 10%.What happens to the quantity of services demanded at City Hospital?

Accepted Answer

A) Quantity demanded rises by 35.0% 
B) Quantity demanded falls by 3.5% 
C) Quantity demanded falls by 1.5% 
D) Quantity demanded rises by 5.0% 
E) Quantity demanded stays the same 
A) Quantity demanded rises by 35.0% 
B) Quantity demanded falls by 3.5% 
C) Quantity demanded falls by 1.5% 
D) Quantity demanded rises by 5.0% 
E) Quantity demanded stays the same

Question 5

Monopolistic competition differs from perfect competition primarily because:

Accepted Answer

A) In monopolistic competition,firms can differentiate their products 
B) In perfect competition,firms can differentiate their products 
C) In monopolistic competition,there are relatively few barriers to entry 
D) In monopolistic competition,entry into the industry is blocked 
A) In monopolistic competition,firms can differentiate their products 
B) In perfect competition,firms can differentiate their products 
C) In monopolistic competition,there are relatively few barriers to entry 
D) In monopolistic competition,entry into the industry is blocked

Question 6

Calculate the Herfindahl-Hirschman Index (HHI)for five hospitals in a market with the following market shares: 50%,25%,10%,10%,and 5%.Is this market more or less concentrated than a market with equal market shares and the same number of firms?

Accepted Answer

HHI = 50² + 25² + 10² + 10² + 5² = 2500

Question 7

The quality of hospitals used by HMOs is on average

Accepted Answer

A) Greater than non-HMO hospitals 
B) Equal to non-HMO hospitals 
C) Less than non-HMO hospitals 
A) Greater than non-HMO hospitals 
B) Equal to non-HMO hospitals 
C) Less than non-HMO hospitals

Question 8

The predominate organizational form for U.S.hospitals is not-for-profit.Why?

Accepted Answer

A) The profit motive corrupts human behavior 
B) For-profit hospitals do not provide charity care 
C) Private not-for-profit hospitals engage in most of the medical research 
D) The not-for-profit form provides the most benefits to physicians 
E) All of the above 
A) The profit motive corrupts human behavior 
B) For-profit hospitals do not provide charity care 
C) Private not-for-profit hospitals engage in most of the medical research 
D) The not-for-profit form provides the most benefits to physicians 
E) All of the above

Question 9

You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services.Your research indicates that the income elasticity of demand for the target market is +0.50;the price elasticity of demand is -0.15;and the cross-price elasticity of demand with respect to the price of services at Rural Hospital,a near-by hospital,is +0.35.Answer the following questions.
The price of services at City Hospital falls by 10%.What happens to the quantity of services demanded by Rural Hospital?

Accepted Answer

A) Quantity demanded at City Hospital increases by 15.0% 
B) Quantity demanded at City Hospital increases by 1.5% 
C) Quantity demanded at Rural Hospital rises by 3.5% 
D) Quantity demanded at Rural Hospital falls by 5.0% 
E) Quantity demanded at City Hospital rises by 5.0% 
A) Quantity demanded at City Hospital increases by 15.0% 
B) Quantity demanded at City Hospital increases by 1.5% 
C) Quantity demanded at Rural Hospital rises by 3.5% 
D) Quantity demanded at Rural Hospital falls by 5.0% 
E) Quantity demanded at City Hospital rises by 5.0%

Question 10

Explain how Certificates of Need (CON)may be anticompetitive.

Accepted Answer

The process of Certificates of Need (CON

Question 11

The cost per patient day at Hospital A is much higher than the cost per patient day at Hospital B.This might be due to

Accepted Answer

A) Hospital A has sicker patients than Hospital B 
B) Hospital A is an academic medical center and Hospital B is not 
C) Hospital A has several long-term union labor contracts while Hospital B does not 
D) Hospital B is more efficient than Hospital A 
E) All of the above are possible 
A) Hospital A has sicker patients than Hospital B 
B) Hospital A is an academic medical center and Hospital B is not 
C) Hospital A has several long-term union labor contracts while Hospital B does not 
D) Hospital B is more efficient than Hospital A 
E) All of the above are possible

Question 12

If hospital transaction costs are high,then

Accepted Answer

A) A hospital is more likely to be vertically integrated 
B) A hospital is more likely to use an integrated delivery systems 
C) Both a and b 
D) Neither a nor b 
A) A hospital is more likely to be vertically integrated 
B) A hospital is more likely to use an integrated delivery systems 
C) Both a and b 
D) Neither a nor b

Question 13

Which of the following is a strategy used by a firm in monopolistic competition?

Accepted Answer

A) Advertising 
B) Lobbying 
C) Improving hospital amenities 
D) All of the above 
A) Advertising 
B) Lobbying 
C) Improving hospital amenities 
D) All of the above

Question 14

Studies have shown that nonprofit hospitals in the United States are ________ than for-profit hospitals.

Accepted Answer

A) Less efficient 
B) More efficient 
C) More efficient and higher quality 
D) Not very different in efficiency 
A) Less efficient 
B) More efficient 
C) More efficient and higher quality 
D) Not very different in efficiency

Question 15

You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services.Your research indicates that the income elasticity of demand for the target market is +0.50;the price elasticity of demand is -0.15;and the cross-price elasticity of demand with respect to the price of services at Rural Hospital,a near-by hospital,is +0.35.Answer the following questions.
If a hospital is experiencing economies of scale,

Accepted Answer

A) Its average cost curve is positively sloped as output increases 
B) Its average cost curve is negatively sloped as output increases 
C) It should reduce its output level to lower costs 
D) Quality is falling as output is rising 
E) Both b and c are true 
A) Its average cost curve is positively sloped as output increases 
B) Its average cost curve is negatively sloped as output increases 
C) It should reduce its output level to lower costs 
D) Quality is falling as output is rising 
E) Both b and c are true

Question 16

The main reason for the dramatic increase in the real cost of a hospital patient bed day over the past 50 years is

Accepted Answer

A) Increased price of medical equipment 
B) Increased quantity of medical equipment 
C) Increased wages and salaries 
D) Increased use of labor 
A) Increased price of medical equipment 
B) Increased quantity of medical equipment 
C) Increased wages and salaries 
D) Increased use of labor

Question 17

Over the past 20 years,the ability of hospitals to cost-shift has

Accepted Answer

A) Increased 
B) Decreased 
C) Remained unchanged 
A) Increased 
B) Decreased 
C) Remained unchanged

Question 18

Which of the following models of hospital ownership is most likely to over invest in hospital capacity?

Accepted Answer

A) For-profit hospital 
B) Physician-controlled hospital 
C) Utility-maximizing hospital 
A) For-profit hospital 
B) Physician-controlled hospital 
C) Utility-maximizing hospital

Question 19

What are the advantages of using the Herfindahl-Hirschman Index versus a concentration ratio?

Accepted Answer

The advantage of this index is that it i

Question 20

Robinson and Luft found that non-price competition among hospitals led to

Accepted Answer

A) Shorter hospital stays 
B) More hospital services 
C) More cost-containment 
D) Less excess capacity 
A) Shorter hospital stays 
B) More hospital services 
C) More cost-containment 
D) Less excess capacity

Over the last 25 years,the number of for-profit hospitals has

Explain why a hospital can be considered a multiproduct firm.

What are the determinants of a geographic market?

Monopolistic competition differs from perfect competition primarily because:

Calculate the Herfindahl-Hirschman Index (HHI)for five hospitals in a market with the following market shares: 50%,25%,10%,10%,and 5%.Is this market more or less concentrated than a market with equal market shares and the same number of firms?

The quality of hospitals used by HMOs is on average

The predominate organizational form for U.S.hospitals is not-for-profit.Why?

Explain how Certificates of Need (CON)may be anticompetitive.

The cost per patient day at Hospital A is much higher than the cost per patient day at Hospital B.This might be due to

If hospital transaction costs are high,then

Which of the following is a strategy used by a firm in monopolistic competition?

Studies have shown that nonprofit hospitals in the United States are ________ than for-profit hospitals.

The main reason for the dramatic increase in the real cost of a hospital patient bed day over the past 50 years is

Over the past 20 years,the ability of hospitals to cost-shift has

Which of the following models of hospital ownership is most likely to over invest in hospital capacity?

What are the advantages of using the Herfindahl-Hirschman Index versus a concentration ratio?

Robinson and Luft found that non-price competition among hospitals led to

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 Demand for Health Insurance

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 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 12: The Market for Hospital Services

Over the last 25 years,the number of for-profit hospitals has

Explain why a hospital can be considered a multiproduct firm.

What are the determinants of a geographic market?

Monopolistic competition differs from perfect competition primarily because:

Calculate the Herfindahl-Hirschman Index (HHI)for five hospitals in a market with the following market shares: 50%,25%,10%,10%,and 5%.Is this market more or less concentrated than a market with equal market shares and the same number of firms?

The quality of hospitals used by HMOs is on average

The predominate organizational form for U.S.hospitals is not-for-profit.Why?

Explain how Certificates of Need (CON)may be anticompetitive.

The cost per patient day at Hospital A is much higher than the cost per patient day at Hospital B.This might be due to

If hospital transaction costs are high,then

Which of the following is a strategy used by a firm in monopolistic competition?

Studies have shown that nonprofit hospitals in the United States are ________ than for-profit hospitals.

The main reason for the dramatic increase in the real cost of a hospital patient bed day over the past 50 years is

Over the past 20 years,the ability of hospitals to cost-shift has

Which of the following models of hospital ownership is most likely to over invest in hospital capacity?

What are the advantages of using the Herfindahl-Hirschman Index versus a concentration ratio?

Robinson and Luft found that non-price competition among hospitals led to

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 Demand for Health Insurance

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 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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