Question 1

Data on the income elasticity of demand for health care suggest that health care is a(n)

Accepted Answer

A)  inelastic good. 
B)  private good. 
C)  public good. 
D)  normal good. 
A)  inelastic good. 
B)  private good. 
C)  public good. 
D)  normal good.

Question 2

The recently enacted health care reform package (the Patient Protection and Affordable Care Act) focuses solely on controlling health care costs.

Accepted Answer

A) True 
 B)False

Question 3

Theoretically, the effect of private health insurance on the price and quantity of health care consumed

Accepted Answer

A)  is the same as that of public health insurance. 
B)  is a lower price and a higher quantity compared to public health insurance. 
C)  is a higher price and a lower quantity compared to public health insurance. 
D)  is a lower price and a lower quantity compared to public health insurance. 
A)  is the same as that of public health insurance. 
B)  is a lower price and a higher quantity compared to public health insurance. 
C)  is a higher price and a lower quantity compared to public health insurance. 
D)  is a lower price and a lower quantity compared to public health insurance.

Question 4

Which of the following persons is most likely to be insured for health care?

Accepted Answer

A)  a minimum-wage teenager working for a fast-food restaurant 
B)  a skilled worker employed by a large multinational corporation 
C)  an unemployed retail clerk 
D)  a part-time groundskeeper for a small manufacturing plant 
A)  a minimum-wage teenager working for a fast-food restaurant 
B)  a skilled worker employed by a large multinational corporation 
C)  an unemployed retail clerk 
D)  a part-time groundskeeper for a small manufacturing plant

Question 5

The reasons why health care costs in countries with public health insurance, like the United Kingdom and Canada, have not risen as much as the costs in the U.S. include the following, except

Accepted Answer

A)  setting a cap on costs to ration health care. 
B)  waiting or queuing to ration health care. 
C)  fixed government budgets for health care, leading to rationing. 
D)  expanded coverage as a way to ration health care. 
A)  setting a cap on costs to ration health care. 
B)  waiting or queuing to ration health care. 
C)  fixed government budgets for health care, leading to rationing. 
D)  expanded coverage as a way to ration health care.

Question 6

The increased practice of "defensive medicine" is a consequence of

Accepted Answer

A)  professional board licensing requirements. 
B)  the threat of medical lawsuits. 
C)  incentives given by drug companies. 
D)  an Act passed by Congress. 
A)  professional board licensing requirements. 
B)  the threat of medical lawsuits. 
C)  incentives given by drug companies. 
D)  an Act passed by Congress.

Question 7

Aggregate U.S. health care spending in 2014 was approximately

Accepted Answer

A)  5.2 percent of domestic output (GDP). 
B)  13.1 percent of domestic output (GDP). 
C)  17.5 percent of domestic output (GDP). 
D)  21 percent of domestic output (GDP). 
A)  5.2 percent of domestic output (GDP). 
B)  13.1 percent of domestic output (GDP). 
C)  17.5 percent of domestic output (GDP). 
D)  21 percent of domestic output (GDP).

Question 8

When economists say that health care services are overconsumed, they mean that

Accepted Answer

A)  rich people buy too much health care and poor people buy too little. 
B)  some resources now used in the health care industry could produce alternative goods and services that society values more highly. 
C)  health care is being purchased in amounts such that marginal benefits exceed marginal costs. 
D)  the price of health care is below equilibrium so that quantity demanded exceeds quantity supplied. 
A)  rich people buy too much health care and poor people buy too little. 
B)  some resources now used in the health care industry could produce alternative goods and services that society values more highly. 
C)  health care is being purchased in amounts such that marginal benefits exceed marginal costs. 
D)  the price of health care is below equilibrium so that quantity demanded exceeds quantity supplied.

Question 9

The main purpose of HMOs and PPOs is to

Accepted Answer

A)  reduce health care costs for employers and their employees. 
B)  reduce medical malpractice suits. 
C)  enable groups of physicians to increase their fees. 
D)  direct patients to specialists rather than to more expensive primary-care physicians. 
A)  reduce health care costs for employers and their employees. 
B)  reduce medical malpractice suits. 
C)  enable groups of physicians to increase their fees. 
D)  direct patients to specialists rather than to more expensive primary-care physicians.

Question 10

Monthly premiums for Medicare insurance that private individuals pay cover how much of the cost of benefits provided by the program?

Accepted Answer

A)  one-fourth 
B)  one-half 
C)  three-fourths 
D)  100 percent 
A)  one-fourth 
B)  one-half 
C)  three-fourths 
D)  100 percent

Question 11

Health care expenditures coming directly out of consumers' pockets, primarily in the form of deductibles and copayments, account for what percentage of U.S. health care spending?

Accepted Answer

A)  21 percent 
B)  35 percent 
C)  44 percent 
D)  17 percent 
A)  21 percent 
B)  35 percent 
C)  44 percent 
D)  17 percent

Question 12

(Consider This) PPACA requirements for health insurance rates created incentives for

Accepted Answer

A)  all uninsured people to purchase health insurance and then overuse the health care services. 
B)  companies to price insurance according to risk profiles. 
C)  older people to purchase, but younger people to decline, health insurance offered through insurance exchanges. 
D)  younger people to purchase, but older people to decline, health insurance offered through insurance exchanges. 
A)  all uninsured people to purchase health insurance and then overuse the health care services. 
B)  companies to price insurance according to risk profiles. 
C)  older people to purchase, but younger people to decline, health insurance offered through insurance exchanges. 
D)  younger people to purchase, but older people to decline, health insurance offered through insurance exchanges.

Question 13

Federal tax policy

Accepted Answer

A)  treats employer health insurance premiums as taxable income. 
B)  subsidizes health insurance and thereby increases the demand for health care. 
C)  subsidizes health insurance and thereby decreases the demand for health care. 
D)  corrects the overallocation of resources to the health care industry that would otherwise exist. 
A)  treats employer health insurance premiums as taxable income. 
B)  subsidizes health insurance and thereby increases the demand for health care. 
C)  subsidizes health insurance and thereby decreases the demand for health care. 
D)  corrects the overallocation of resources to the health care industry that would otherwise exist.

Question 14

The number of Americans without health insurance (as of 2015) is approximately

Accepted Answer

A)  20 million, or about 6.3 percent of the population. 
B)  49 million, or about 15.3 percent of the population. 
C)  30 million, or about 9.4 percent of the population. 
D)  72 million, or about 22.5 percent of the population. 
A)  20 million, or about 6.3 percent of the population. 
B)  49 million, or about 15.3 percent of the population. 
C)  30 million, or about 9.4 percent of the population. 
D)  72 million, or about 22.5 percent of the population.

Question 15

Insurance tends to drive up health care costs by encouraging greater use of health care resources. Why has this occurred in the United States but not in Canada or the United Kingdom?

Accepted Answer

A)  There is no health care insurance in Canada or the United Kingdom. 
B)  Canada and the United Kingdom use nonprice rationing to contain costs. 
C)  Canada and the United Kingdom have better health care technology that allows them to achieve lower costs than the United States. 
D)  Only private insurance creates an incentive to overuse health care resources. 
A)  There is no health care insurance in Canada or the United Kingdom. 
B)  Canada and the United Kingdom use nonprice rationing to contain costs. 
C)  Canada and the United Kingdom have better health care technology that allows them to achieve lower costs than the United States. 
D)  Only private insurance creates an incentive to overuse health care resources.

Question 16

Attempts to alter incentives and contain health care costs include the following, except

Accepted Answer

A)  imposing a copayment or a deductible. 
B)  adopting managed-care systems, such as PPOs and HMOs. 
C)  universal coverage. 
D)  diagnosis-related groups (DRGs) of Medicare. 
A)  imposing a copayment or a deductible. 
B)  adopting managed-care systems, such as PPOs and HMOs. 
C)  universal coverage. 
D)  diagnosis-related groups (DRGs) of Medicare.

Question 17

Raising the deductibles and copayments is a way of dealing with the

Accepted Answer

A)  adverse selection problem of health insurance 
B)  moral hazard problem of health insurance. 
C)  asymmetric information between doctors and patients. 
D)  externalities of health care. 
A)  adverse selection problem of health insurance 
B)  moral hazard problem of health insurance. 
C)  asymmetric information between doctors and patients. 
D)  externalities of health care.

Question 18

By early 2016, after PPACA had been in effect for two years, one major problem that became apparent was that

Accepted Answer

A)  many employers were limiting workers to only part-time work to avoid the expensive employer mandate. 
B)  most states quickly set up their PPACA-related insurance exchanges without properly vetting applicants. 
C)  insurance exchanges in many states were swamped with applicants, resulting in severe resource problems. 
D)  the government had to close down many states' insurance exchanges due to abuses. 
A)  many employers were limiting workers to only part-time work to avoid the expensive employer mandate. 
B)  most states quickly set up their PPACA-related insurance exchanges without properly vetting applicants. 
C)  insurance exchanges in many states were swamped with applicants, resulting in severe resource problems. 
D)  the government had to close down many states' insurance exchanges due to abuses.

Question 19

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

Accepted Answer

A) True 
 B)False

Question 20

The twin problems of health care in the U.S. are the rapidly rising cost of health care and limited access to health insurance coverage.

Accepted Answer

A) True 
 B)False

Exam 24: Health Care

Data on the income elasticity of demand for health care suggest that health care is a(n)

The recently enacted health care reform package (the Patient Protection and Affordable Care Act) focuses solely on controlling health care costs.

Theoretically, the effect of private health insurance on the price and quantity of health care consumed

Which of the following persons is most likely to be insured for health care?

The reasons why health care costs in countries with public health insurance, like the United Kingdom and Canada, have not risen as much as the costs in the U.S. include the following, except

The increased practice of "defensive medicine" is a consequence of

Aggregate U.S. health care spending in 2014 was approximately

When economists say that health care services are overconsumed, they mean that

The main purpose of HMOs and PPOs is to

Monthly premiums for Medicare insurance that private individuals pay cover how much of the cost of benefits provided by the program?

Health care expenditures coming directly out of consumers' pockets, primarily in the form of deductibles and copayments, account for what percentage of U.S. health care spending?

(Consider This) PPACA requirements for health insurance rates created incentives for

Federal tax policy

The number of Americans without health insurance (as of 2015) is approximately

Insurance tends to drive up health care costs by encouraging greater use of health care resources. Why has this occurred in the United States but not in Canada or the United Kingdom?

Attempts to alter incentives and contain health care costs include the following, except

Raising the deductibles and copayments is a way of dealing with the

By early 2016, after PPACA had been in effect for two years, one major problem that became apparent was that

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

The twin problems of health care in the U.S. are the rapidly rising cost of health care and limited access to health insurance coverage.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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