Question 1

In the United States, out-of-pocket spending on health care is about ________ percent of all health care spending.

Accepted Answer

A)  2 
B)  10 
C)  33 
D)  48

Question 2

If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce

Accepted Answer

A)  the problem of adverse selection. 
B)  the moral hazard problem. 
C)  sunk costs. 
D)  asymmetric information.

Question 3

Which of the following did not contribute to the overall decline in death rates in the United States since 1981?

Accepted Answer

A)  a decline in smoking 
B)  the decline in the population 
C)  the availability of new prescription drugs 
D)  new surgical techniques

Question 4

Those who favor changes in the market for health care that would make it more like the markets for other goods and services are generally in favor of universal health care coverage.

Accepted Answer

A) True 
 B)False

Question 5

What is adverse selection?

Accepted Answer

The answer of What is adverse selection?...

Question 6

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.

Question 7

Vaccinations tend to result in a positive externality. Draw a graph showing the market for vaccinations, including both the marginal private benefit curve and the marginal social benefit curve. Identify the market equilibrium price and quantity, the efficient equilibrium price and quantity, and the deadweight loss.

Accepted Answer

The answer of Vaccinations tend to result in a positive...

Question 8

Figure 7-4  Figure 7-4 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 7-4. With insurance and a third-party payer system, what price do doctors receive for medical services?

Accepted Answer

A)  $25 
B)  $40 
C)  $55 
D)  >$55

Question 9

In the United States, health care spending on people over age 65 is ________ on people aged 18 to 24.

Accepted Answer

A)  one third as much as 
B)  twice as much as 
C)  six times greater than 
D)  forty times greater than

Question 10

In 2017, the average life expectancy at birth in the United Kingdom and other high-income countries was around ________ years.

Accepted Answer

A)  60 
B)  70 
C)  80 
D)  90

Question 11

A majority of people in the United States do not have private health insurance.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

What has happened to health care's share of gross domestic product in the United States since 1965? How does this compare to what has happened to out-of-pocket spending on health care as a percentage of all spending on health care?

Accepted Answer

The answer of What has happened to health care's share...

Question 14

The Congressional Budget Office estimates that the payments to settle malpractice lawsuits and the premiums doctors pay for malpractice insurance account for ________ of health care costs in the United States.

Accepted Answer

A)  between 20 and 30 percent 
B)  roughly half 
C)  less than 1 percent 
D)  a vast majority

Question 15

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

The answer of In what ways do economists and policymakers...

Question 16

How can increases in a country's total income improve health?

Accepted Answer

The answer of How can increases in a country's total...

Question 17

Which of the following is not part of the "state health insurance marketplaces" provision of the Patient Protection and Affordable Care Act (ACA)?

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)  None of the above are a part of the "state health insurance marketplaces" provision.

Question 18

In 2016, ________ percent of people enrolled in health insurance marketplaces had a choice of at least three insurance companies from which to buy a policy. By 2017, ________ percent had that choice.

Accepted Answer

A)  85; 57 
B)  98; 18 
C)  66; 79 
D)  72; 88

Question 19

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

Accepted Answer

The answer of What are the main sources of health...

Question 20

What is the principal-agent problem?

Accepted Answer

The answer of What is the principal-agent problem?...

Exam 7: The Economics of Health Care