Question 1

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 2

Compared to the United States,health care spending per person in other high-income countries has been

Accepted Answer

A)  growing at a slower rate. 
B)  growing at a faster rate. 
C)  growing at approximately the same rate. 
D)  declining at approximately the same rate. 
A)  growing at a slower rate. 
B)  growing at a faster rate. 
C)  growing at approximately the same rate. 
D)  declining at approximately the same rate.

Question 3

________ occurs when actions taken by one party to a transaction are different from what the other party expected at the time of the transaction.

Accepted Answer

A)  Adverse selection 
B)  Risk aversion 
C)  Fraud 
D)  Moral hazard 
A)  Adverse selection 
B)  Risk aversion 
C)  Fraud 
D)  Moral hazard

Question 4

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (ACA)except

Accepted Answer

A)  individuals with pre-existing medical conditions are able to acquire health insurance. 
B)  all policies must provide coverage for dependant children up to age 26. 
C)  lifetime dollar maximums on coverage are prohibited. 
D)  limits on the size of deductibles and on waiting periods before coverage takes effect have been eliminated. 
A)  individuals with pre-existing medical conditions are able to acquire health insurance. 
B)  all policies must provide coverage for dependant children up to age 26. 
C)  lifetime dollar maximums on coverage are prohibited. 
D)  limits on the size of deductibles and on waiting periods before coverage takes effect have been eliminated.

Question 5

In the principal-agent relationship,the principal is

Accepted Answer

A)  the owner of a resource that has hired a third party to act in the best interest of that third party. 
B)  the person who is placed in control over resources that are not his own, with a contractual obligation to use these resources in the interests of some other party. 
C)  the person who is placed in control over resources that are not his own and agrees to compensate the resource owner in the event of outcomes that do not satisfy the resource owner. 
D)  the person who places his resources in professional hands in exchange for the professional's promise to act on the resource owner's behalf. 
A)  the owner of a resource that has hired a third party to act in the best interest of that third party. 
B)  the person who is placed in control over resources that are not his own, with a contractual obligation to use these resources in the interests of some other party. 
C)  the person who is placed in control over resources that are not his own and agrees to compensate the resource owner in the event of outcomes that do not satisfy the resource owner. 
D)  the person who places his resources in professional hands in exchange for the professional's promise to act on the resource owner's behalf.

Question 6

Economists who support market-based reforms for health care believe that increased competition among providers of health care would

Accepted Answer

A)  decrease costs but decrease economic efficiency. 
B)  decrease costs and increase economic efficiency. 
C)  increase costs but increase economic efficiency. 
D)  increase costs and decrease economic efficiency. 
A)  decrease costs but decrease economic efficiency. 
B)  decrease costs and increase economic efficiency. 
C)  increase costs but increase economic efficiency. 
D)  increase costs and decrease economic efficiency.

Question 7

In the United States in 2016,________ of uninsured people live in families in which at least one member has a job.

Accepted Answer

A)  less than 12% 
B)  about 38% 
C)  more than 70% 
D)  almost 98% 
A)  less than 12% 
B)  about 38% 
C)  more than 70% 
D)  almost 98%

Question 8

In 2017,health care's share of gross domestic product in the United States was about

Accepted Answer

A)  6.5 percent. 
B)  18 percent. 
C)  45 percent. 
D)  62.5 percent. 
A)  6.5 percent. 
B)  18 percent. 
C)  45 percent. 
D)  62.5 percent.

Question 9

What is adverse selection?

Accepted Answer

A)  It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus. 
B)  It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off. 
C)  It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. 
D)  It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction. 
A)  It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus. 
B)  It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off. 
C)  It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. 
D)  It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

Question 10

Explain why the death rates due to kidney disease and diabetes have slightly increased in the United States since 1981.

Accepted Answer

An increase in obesity is gene

Question 11

Figure 5-5
   Figure 5-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 5-5.With insurance and a third-party payer system,what price do doctors receive for medical services?

Accepted Answer

A)  $40 
B)  $55 
C)  $65 
D)  > $65 
A)  $40 
B)  $55 
C)  $65 
D)  > $65

Question 12

If a hospital knows that an insurance company will pay for most of a patient's bill,the hospital has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

Accepted Answer

A)  moral hazard. 
B)  the principal-agent problem. 
C)  asymmetric information. 
D)  adverse selection. 
A)  moral hazard. 
B)  the principal-agent problem. 
C)  asymmetric information. 
D)  adverse selection.

Question 13

What are the main sources of health insurance in the United States?

Accepted Answer

The percentage of Americans covered by v

Question 14

Health care spending per person is lower in the United States than in most other high-income countries.

Accepted Answer

A) True 
 B)False

Question 15

________ account(s)for between 1 and 4 percent of health care costs in the United States.

Accepted Answer

A)  The aging population 
B)  Uninsured patients receiving treatments at hospital emergency rooms that could have been provided less expensively at doctor's offices 
C)  The payments to settle malpractice lawsuits and the premiums doctors pay for malpractice insurance 
D)  Advances in medical technology 
A)  The aging population 
B)  Uninsured patients receiving treatments at hospital emergency rooms that could have been provided less expensively at doctor's offices 
C)  The payments to settle malpractice lawsuits and the premiums doctors pay for malpractice insurance 
D)  Advances in medical technology

Question 16

Adverse selection will occur in a market as a result of

Accepted Answer

A)  asymmetric information. 
B)  moral hazard. 
C)  the sale of "lemons." 
D)  rational ignorance. 
A)  asymmetric information. 
B)  moral hazard. 
C)  the sale of "lemons." 
D)  rational ignorance.

Question 17

Typically,the ________ in a country,the higher the level of spending per person on health care.

Accepted Answer

A)  higher the level of income per person 
B)  larger the population 
C)  higher the level of income taxes 
D)  lower the median age of the population 
A)  higher the level of income per person 
B)  larger the population 
C)  higher the level of income taxes 
D)  lower the median age of the population

Question 18

Why is the study of asymmetric information associated with the market for "lemons"?

Accepted Answer

A)  Sellers of citrus fruit-lemons, oranges, grapefruit-know the difference between bad fruit and good fruit; buyers do not have this information. 
B)  Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased. 
C)  Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons." 
D)  Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons." 
A)  Sellers of citrus fruit-lemons, oranges, grapefruit-know the difference between bad fruit and good fruit; buyers do not have this information. 
B)  Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased. 
C)  Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons." 
D)  Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."

Question 19

The United Kingdom has a health care system under which the government owns most of the hospitals and employs most of the doctors.

Accepted Answer

A) True 
 B)False

Question 20

The individual mandate provision of the ACA requires

Accepted Answer

A)  every U.S. resident to have health insurance. 
B)  every U.S. company to provide health insurance to its employees. 
C)  every employed person to pay for his or her own health insurance. 
D)  every private insurance company to provide free health care to its current policy holders. 
A)  every U.S. resident to have health insurance. 
B)  every U.S. company to provide health insurance to its employees. 
C)  every employed person to pay for his or her own health insurance. 
D)  every private insurance company to provide free health care to its current policy holders.

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

Compared to the United States,health care spending per person in other high-income countries has been

________ occurs when actions taken by one party to a transaction are different from what the other party expected at the time of the transaction.

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (ACA)except

In the principal-agent relationship,the principal is

Economists who support market-based reforms for health care believe that increased competition among providers of health care would

In the United States in 2016,________ of uninsured people live in families in which at least one member has a job.

In 2017,health care's share of gross domestic product in the United States was about

What is adverse selection?

Explain why the death rates due to kidney disease and diabetes have slightly increased in the United States since 1981.

Figure 5-5 Figure 5-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. -Refer to Figure 5-5.With insurance and a third-party payer system,what price do doctors receive for medical services?

If a hospital knows that an insurance company will pay for most of a patient's bill,the hospital has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

What are the main sources of health insurance in the United States?

Health care spending per person is lower in the United States than in most other high-income countries.

________ account(s)for between 1 and 4 percent of health care costs in the United States.

Adverse selection will occur in a market as a result of

Typically,the ________ in a country,the higher the level of spending per person on health care.

Why is the study of asymmetric information associated with the market for "lemons"?

The United Kingdom has a health care system under which the government owns most of the hospitals and employs most of the doctors.

The individual mandate provision of the ACA requires

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

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Exam 5: The Economics of Health Care

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

Compared to the United States,health care spending per person in other high-income countries has been

________ occurs when actions taken by one party to a transaction are different from what the other party expected at the time of the transaction.

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (ACA)except

In the principal-agent relationship,the principal is

Economists who support market-based reforms for health care believe that increased competition among providers of health care would

In the United States in 2016,________ of uninsured people live in families in which at least one member has a job.

In 2017,health care's share of gross domestic product in the United States was about

What is adverse selection?

Explain why the death rates due to kidney disease and diabetes have slightly increased in the United States since 1981.

Figure 5-5 Figure 5-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. -Refer to Figure 5-5.With insurance and a third-party payer system,what price do doctors receive for medical services?

If a hospital knows that an insurance company will pay for most of a patient's bill,the hospital has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

What are the main sources of health insurance in the United States?

Health care spending per person is lower in the United States than in most other high-income countries.

________ account(s)for between 1 and 4 percent of health care costs in the United States.

Adverse selection will occur in a market as a result of

Typically,the ________ in a country,the higher the level of spending per person on health care.

Why is the study of asymmetric information associated with the market for "lemons"?

The United Kingdom has a health care system under which the government owns most of the hospitals and employs most of the doctors.

The individual mandate provision of the ACA requires

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters