Question 1

Health problems prevent people from working harder,which can lower a country's total income.This indicates that in effect,health problems

Accepted Answer

A) are a primary cause of price decreases. 
B) increase the incentive to work. 
C) shift a country's production possibilities frontier inward. 
D) decrease consumer surplus. 
A) are a primary cause of price decreases. 
B) increase the incentive to work. 
C) shift a country's production possibilities frontier inward. 
D) decrease consumer surplus.

Question 2

Suppose a large firm allows its employees to choose whether to participate in its health insurance plan.The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible,and Plan II has a high monthly premium but a low deductible.Under which plan is adverse selection likely to be a bigger problem?

Accepted Answer

A) Plan I because it is likely to draw participants who expect high medical costs.This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs.Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care.Because the monthly premiums are low,the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible.Insurance companies are likely to end up paying out more claims than the premiums they collect. 
A) Plan I because it is likely to draw participants who expect high medical costs.This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs.Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care.Because the monthly premiums are low,the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible.Insurance companies are likely to end up paying out more claims than the premiums they collect.

Question 3

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

Accepted Answer

A) asymmetric information. 
B) market signaling. 
C) moral hazard. 
D) adverse selection. 
A) asymmetric information. 
B) market signaling. 
C) moral hazard. 
D) adverse selection.

Question 4

Figure 7-5 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 7-5.With insurance and a third-party payer system,what is the amount of the deadweight loss?

Accepted Answer

A) $0 
B) $2,500 
C) $5,000 
D) $24,000 
A) $0 
B) $2,500 
C) $5,000 
D) $24,000

Question 5

In what ways do economists and policymakers who believe that market-based reforms are the key to improving the health care system criticize the Patient Protection and Affordable Care Act (ACA)?

Accepted Answer

These people believe that the market for

Question 6

Figure 7-5 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 7-5.If consumers paid the full price of medical services,the price they would pay is

Accepted Answer

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

Question 7

Typically,the higher the level of income per person in a country,the higher the level of spending per person on health care.This relationship between income and spending indicates that health care is a

Accepted Answer

A) normal good. 
B) inferior good. 
C) luxury. 
D) necessity. 
A) normal good. 
B) inferior good. 
C) luxury. 
D) necessity.

Question 8

Briefly describe the 6 main provisions of the Patient Protection and Affordable Care Act (ACA)?

Accepted Answer

1.Individual mandate requires that every

Question 9

Federal and state governments in the United States pay for ________ of health care spending.

Accepted Answer

A) less than 10 percent 
B) approximately 34 percent 
C) just over half 
D) more than 80 percent 
A) less than 10 percent 
B) approximately 34 percent 
C) just over half 
D) more than 80 percent

Question 10

In the United States,out-of-pocket spending on health care as a percentage of all spending on health care has ________ since 1960.

Accepted Answer

A) slowly risen 
B) steadily declined 
C) more than doubled 
D) remained stable 
A) slowly risen 
B) steadily declined 
C) more than doubled 
D) remained stable

Question 11

Growth in labor productivity in health care has been ________ labor productivity in the economy as a whole.

Accepted Answer

A) approximately equal to 
B) slightly faster than 
C) almost twice as fast as 
D) less than half as fast as 
A) approximately equal to 
B) slightly faster than 
C) almost twice as fast as 
D) less than half as fast as

Question 12

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

Accepted Answer

A) each state is required to establish an Affordable Insurance Exchange. 
B) small businesses with fewer than 50 employees are exempt from being required to participate in the program. 
C) low-income individuals are eligible for tax credits to offset the costs of buying health insurance. 
D) the marketplaces offer health insurance policies that meet certain specified requirements. 
A) each state is required to establish an Affordable Insurance Exchange. 
B) small businesses with fewer than 50 employees are exempt from being required to participate in the program. 
C) low-income individuals are eligible for tax credits to offset the costs of buying health insurance. 
D) the marketplaces offer health insurance policies that meet certain specified requirements.

Question 13

In 2015,health care's share of gross domestic product in the United States

Accepted Answer

A) had returned to its 1995 level. 
B) had declined to only 6.5 percent. 
C) was almost than three times as high as it was in 1965. 
D) reached a level of 75 percent. 
A) had returned to its 1995 level. 
B) had declined to only 6.5 percent. 
C) was almost than three times as high as it was in 1965. 
D) reached a level of 75 percent.

Question 14

In the United States in 2014,the percentage of firms that employed between 3 and 199 workers and offered health insurance as a fringe benefit to the workers was about

Accepted Answer

A) 29%. 
B) 42%. 
C) 54%. 
D) 98%. 
A) 29%. 
B) 42%. 
C) 54%. 
D) 98%.

Question 15

In the United States,consumers usually pay ________ than the true cost of medical treatment because of ________.

Accepted Answer

A) more;adverse selection 
B) more;rising insurance premiums 
C) less;third-party payers 
D) less;rising insurance deductibles 
A) more;adverse selection 
B) more;rising insurance premiums 
C) less;third-party payers 
D) less;rising insurance deductibles

Question 16

Suppose that in a market for used cars,there are good used cars and bad used cars (lemons).Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon.Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each.Buyers cannot tell if a used car is reliable or is a lemon.Based on this information,what is the likely outcome in the market for used cars?

Accepted Answer

A) Sellers of good used cars will drop out of the market. 
B) Sellers of good used cars will incur losses. 
C) Sellers of lemons will drop out of the market. 
D) Used cars will sell for $3,000. 
A) Sellers of good used cars will drop out of the market. 
B) Sellers of good used cars will incur losses. 
C) Sellers of lemons will drop out of the market. 
D) Used cars will sell for $3,000.

Question 17

What is moral hazard?

Accepted Answer

Moral hazard is a tendency for

Question 18

Economists who support market-based reforms for health care believe that increased competition among providers of health care would ________ costs and ________ economic efficiency.

Accepted Answer

A) increase;increase 
B) increase;decrease 
C) decrease;increase 
D) decrease;decrease 
A) increase;increase 
B) increase;decrease 
C) decrease;increase 
D) decrease;decrease

Exam 7: The Economics of Health Care

Health problems prevent people from working harder,which can lower a country's total income.This indicates that in effect,health problems

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

Figure 7-5 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 7-5.With insurance and a third-party payer system,what is the amount of the deadweight loss?

In what ways do economists and policymakers who believe that market-based reforms are the key to improving the health care system criticize the Patient Protection and Affordable Care Act (ACA)?

Figure 7-5 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 7-5.If consumers paid the full price of medical services,the price they would pay is

Typically,the higher the level of income per person in a country,the higher the level of spending per person on health care.This relationship between income and spending indicates that health care is a

Briefly describe the 6 main provisions of the Patient Protection and Affordable Care Act (ACA)?

Federal and state governments in the United States pay for ________ of health care spending.

In the United States,out-of-pocket spending on health care as a percentage of all spending on health care has ________ since 1960.

Growth in labor productivity in health care has been ________ labor productivity in the economy as a whole.

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

In 2015,health care's share of gross domestic product in the United States

In the United States in 2014,the percentage of firms that employed between 3 and 199 workers and offered health insurance as a fringe benefit to the workers was about

In the United States,consumers usually pay ________ than the true cost of medical treatment because of ________.

What is moral hazard?

Economists who support market-based reforms for health care believe that increased competition among providers of health care would ________ costs and ________ economic efficiency.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In the United States,consumers usually pay than the true cost of medical treatment because of .

Economists who support market-based reforms for health care believe that increased competition among providers of health care would costs and economic efficiency.