Question 1

_____ taxes have risen more rapidly in the past two decades than any other tax.

Accepted Answer

A) Social security 
B) Corporate 
C) Property 
D) Sales 
E) Income 
A) Social security 
B) Corporate 
C) Property 
D) Sales 
E) Income

Question 2

The American Medical Association's payment system is an example of a:

Accepted Answer

A) price floor. 
B) price ceiling. 
C) tariff. 
D) barrier to entry. 
E) quota. 
A) price floor. 
B) price ceiling. 
C) tariff. 
D) barrier to entry. 
E) quota.

Question 3

As three-quarters of the world's population resides in the developing countries,these areas contain around 80 percent of the world's elderly population.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following facts is true of medicare?

Accepted Answer

A) It has caused the price elasticity of the demand for health care to increase. 
B) It is financed by state excise and sales taxes and is available on the basis of need and not disability. 
C) It covers the cost of first 100 days of hospital treatment provided only to the unemployed people. 
D) It covers the cost of the first 100 days of hospital or nursing home care for the elderly. 
E) They are subsidies given by the U.S.government to private health insurance companies. 
A) It has caused the price elasticity of the demand for health care to increase. 
B) It is financed by state excise and sales taxes and is available on the basis of need and not disability. 
C) It covers the cost of first 100 days of hospital treatment provided only to the unemployed people. 
D) It covers the cost of the first 100 days of hospital or nursing home care for the elderly. 
E) They are subsidies given by the U.S.government to private health insurance companies.

Question 5

Empirical evidence suggests that the aging of the population stimulates the demand for health care.In the light of this observation,identify the correct statement.

Accepted Answer

A) The aged population accounts for around eleven percent of hospital expenditures. 
B) Per capita spending on personal health care for those 85 years of age or over is less than that for people of 60-65 years. 
C) The per capita consumption of nursing home care by people between 60-65 years is twice that of people of age 85 years or more. 
D) About sixty percent of the expenditure on nursing home care are for people aged between 30 and 40 years. 
E) About ninety percent of the expenditure on nursing home care are for people aged 65 years or over. 
A) The aged population accounts for around eleven percent of hospital expenditures. 
B) Per capita spending on personal health care for those 85 years of age or over is less than that for people of 60-65 years. 
C) The per capita consumption of nursing home care by people between 60-65 years is twice that of people of age 85 years or more. 
D) About sixty percent of the expenditure on nursing home care are for people aged between 30 and 40 years. 
E) About ninety percent of the expenditure on nursing home care are for people aged 65 years or over.

Question 6

The high cost of hospital care in the U.S.is primarily attributable to:

Accepted Answer

A) the way in which capital purchases are financed. 
B) the increased occupancy rate in the hospitals. 
C) the lack of sufficient hospital beds. 
D) the greater availability of physicians. 
E) the increased malpractice by the physicians. 
A) the way in which capital purchases are financed. 
B) the increased occupancy rate in the hospitals. 
C) the lack of sufficient hospital beds. 
D) the greater availability of physicians. 
E) the increased malpractice by the physicians.

Question 7

The introduction of government and private insurance programs to cover the cost of medical care has led to a decline in the price of medical care.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about Medicare is correct?

Accepted Answer

A) Medicare covers the entire cost of hospital or nursing home care of the old people. 
B) Medicare had emerged in the 1950s. 
C) Medicare covers the first 100 days of hospital or nursing home care of the old people. 
D) Medicare is available on the basis of need. 
E) Medicare is funded by property taxes. 
A) Medicare covers the entire cost of hospital or nursing home care of the old people. 
B) Medicare had emerged in the 1950s. 
C) Medicare covers the first 100 days of hospital or nursing home care of the old people. 
D) Medicare is available on the basis of need. 
E) Medicare is funded by property taxes.

Question 9

The new technologies developed in the field of medical care are cost-increasing innovations and because costs are not paid by the users,the increased technology increases demand.

Accepted Answer

A) True 
 B)False

Question 10

Demand for medical care remaining constant,if the supply of medical care is decreased,the price of medical care increases.

Accepted Answer

A) True 
 B)False

Question 11

People who oppose the establishment of an open market in human organs justify their view on the ground that:

Accepted Answer

A) it would yield huge profits to the privately owned medical care centers. 
B) it would lead to a chronic organ shortage. 
C) it would result in the exploitation of the poor. 
D) it would induce people to fritter away money earned through the sale of organs. 
E) although the poor people are in greater need of the organs,yet they would not be able to afford them because of their high price. 
A) it would yield huge profits to the privately owned medical care centers. 
B) it would lead to a chronic organ shortage. 
C) it would result in the exploitation of the poor. 
D) it would induce people to fritter away money earned through the sale of organs. 
E) although the poor people are in greater need of the organs,yet they would not be able to afford them because of their high price.

Question 12

The figure given below represents demand for and supply of hospital beds in Anytown,U.S.A.,as shown by curves D and SS1U1B11 S1U1B0in the following figure.If the hospital receives permission to expand,its new supply curve will be SS1U1B12S1U1B0.Price level PS1U1B11S1U1B0 is the fixed prospective payment reimbursement rate paid by Medicare to the hospital,regardless of actual cost. Figure 18.3
 
-According to Figure 18.3,the surplus of beds caused by the fixed reimbursement rate,before the hospital expansion,is the difference between _____ and _____.

Accepted Answer

A) Q2; Q1 
B) Q4; Q1 
C) Q4; Q2 
D) Q3; Q1 
E) Q3; Q2 
A) Q2; Q1 
B) Q4; Q1 
C) Q4; Q2 
D) Q3; Q1 
E) Q3; Q2

Question 13

The demand curve for medical care is positively sloped.Thus irrespective of the high price of medical care its demand is always high.

Accepted Answer

A) True 
 B)False

Question 14

Why are black markets for human organs less efficient than free markets?

Accepted Answer

A) Prices are lower in black markets than in free markets. 
B) Traders are discreet in free markets. 
C) There are a more traders in the black market compared to the free markets. 
D) Buyers cannot meet openly with the sellers in black market as they can in free markets. 
E) There is a steady supply of human organs in the free market while the supply in black market is unpredictable. 
A) Prices are lower in black markets than in free markets. 
B) Traders are discreet in free markets. 
C) There are a more traders in the black market compared to the free markets. 
D) Buyers cannot meet openly with the sellers in black market as they can in free markets. 
E) There is a steady supply of human organs in the free market while the supply in black market is unpredictable.

Question 15

The following figure shows the demand (D) and supply (S) curves of human organs Figure 18.5
 
-In Figure 18.5,if the price for human organs falls to P3:

Accepted Answer

A) there will be a surplus of human organs by Q5 - Q2. 
B) there will be a shortage of human organs by Q4 - Q3. 
C) there will be a shortage of human organs by Q5 - Q3. 
D) there will be a surplus of human organs by Q4 - Q3. 
E) there will be a shortage of human organs by Q5 - Q1. 
A) there will be a surplus of human organs by Q5 - Q2. 
B) there will be a shortage of human organs by Q4 - Q3. 
C) there will be a shortage of human organs by Q5 - Q3. 
D) there will be a surplus of human organs by Q4 - Q3. 
E) there will be a shortage of human organs by Q5 - Q1.

Question 16

One of the major impacts of the aging of the population is:

Accepted Answer

A) increase in the production of necessary goods in the economy. 
B) increase in government revenue generation. 
C) increase in the expenditure on health care. 
D) addition to the labor force. 
E) decrease in transfer payments made by the government. 
A) increase in the production of necessary goods in the economy. 
B) increase in government revenue generation. 
C) increase in the expenditure on health care. 
D) addition to the labor force. 
E) decrease in transfer payments made by the government.

Question 17

The system of adjusting social security benefits annually as the cost of living increases in the United States has been a result of intellectual foresight by the American economists.

Accepted Answer

A) True 
 B)False

Question 18

Many doctors,lawyers,and economists opine that an existence of a legal market for human organs will help cure their chronic shortage that is gripping transplant medicine.

Accepted Answer

A) True 
 B)False

Question 19

A physician who prescribes unnecessary tests to her patients is most likely defending:

Accepted Answer

A) his patients against chronic diseases. 
B) the reputation of all physicians. 
C) the general health of the community. 
D) the hospital's reputation and goodwill. 
E) himself or herself against the possibility of a malpractice suit. 
A) his patients against chronic diseases. 
B) the reputation of all physicians. 
C) the general health of the community. 
D) the hospital's reputation and goodwill. 
E) himself or herself against the possibility of a malpractice suit.

Question 20

The figure below shows the demand (AD) and supply (SSS1U1B11S1U1B0) curves of medical care. Figure 18.4
 
-Refer to Figure 18.4.If the third-party system now induces those people to avail medical care who were earlier not willing to avail it,the demand curve AD would:

Accepted Answer

A) shift inward. 
B) become perfectly elastic. 
C) become vertical. 
D) remain unchanged. 
E) shift outward. 
A) shift inward. 
B) become perfectly elastic. 
C) become vertical. 
D) remain unchanged. 
E) shift outward.

Exam 18: Aging, Social Security and Health Care

_____ taxes have risen more rapidly in the past two decades than any other tax.

The American Medical Association's payment system is an example of a:

As three-quarters of the world's population resides in the developing countries,these areas contain around 80 percent of the world's elderly population.

Which of the following facts is true of medicare?

Empirical evidence suggests that the aging of the population stimulates the demand for health care.In the light of this observation,identify the correct statement.

The high cost of hospital care in the U.S.is primarily attributable to:

The introduction of government and private insurance programs to cover the cost of medical care has led to a decline in the price of medical care.

Which of the following statements about Medicare is correct?

The new technologies developed in the field of medical care are cost-increasing innovations and because costs are not paid by the users,the increased technology increases demand.

Demand for medical care remaining constant,if the supply of medical care is decreased,the price of medical care increases.

People who oppose the establishment of an open market in human organs justify their view on the ground that:

The demand curve for medical care is positively sloped.Thus irrespective of the high price of medical care its demand is always high.

Why are black markets for human organs less efficient than free markets?

The following figure shows the demand (D) and supply (S) curves of human organs Figure 18.5 -In Figure 18.5,if the price for human organs falls to P3:

One of the major impacts of the aging of the population is:

The system of adjusting social security benefits annually as the cost of living increases in the United States has been a result of intellectual foresight by the American economists.

Many doctors,lawyers,and economists opine that an existence of a legal market for human organs will help cure their chronic shortage that is gripping transplant medicine.

A physician who prescribes unnecessary tests to her patients is most likely defending:

The figure below shows the demand (AD) and supply (SS1) curves of medical care. Figure 18.4 -Refer to Figure 18.4.If the third-party system now induces those people to avail medical care who were earlier not willing to avail it,the demand curve AD would:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The following figure shows the demand (D) and supply (S) curves of human organs Figure 18.5 -In Figure 18.5,if the price for human organs falls to P₃:

The figure below shows the demand (AD) and supply (SS₁) curves of medical care. Figure 18.4 -Refer to Figure 18.4.If the third-party system now induces those people to avail medical care who were earlier not willing to avail it,the demand curve AD would: