Question 1

Explain the difference between the slope of a demand curve and the elasticity of demand.

Accepted Answer

Along any single straight-line demand curve, the elasticity of demand will decrease with successive reductions in price. While elasticity is related to slope, it is not identical with the slope of the curve. For example, the slope of a linear curve is constant, but the elasticity varies along the linear demand curve. Slope is defined as "rise over run," in which rise reflects the change in price and run reflects the change in quantity. Slope is the ratio of changes in two variables, and elasticity is the ratio of percentage changes in two variables.

Question 2

The change in total utility resulting from a unit change in the consumption of a good or services is called

Accepted Answer

A)   Absolute utility
B)   Diminishing marginal utility
C)   Marginal utility
D)   None of the above C

Question 3

A model is a complete description of reality.

Accepted Answer

A) True 
 B)False  False

Question 4

Price elasticity of demand is designed to measure the responsiveness of demand to a price change at a given point or between two given points on a single demand curve.

Accepted Answer

A) True 
 B)False

Question 5

Currently, there is a $0.50 copayment on drugs. The HMO has decided to raise this to $1.00 per prescription. The cost of a prescription is $6.00, which means the HMO's contribution to the total cost will fall from $5.50 to $5.00. Currently, the arc elasticity of demand is about -0.5 for prescriptions, and the HMO members use 2.2 prescriptions per capitA) How much will be de?manded after the new copayment is put into effect, and how much money will this save the HMO?

Accepted Answer

The answer of Currently, there is a $0.50 copayment on...

Question 6

For a normal good, there is a direct relationship between price and quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

Measures of ability to purchase healthcare services include:

Accepted Answer

A)   An individual's earnings in a specific time period
B)   An individual's level of wealth
C)   An individual's after-tax income
D)   A and C only
E)   A, B, and C

Question 8

In the demand model, the endogenous variable is:

Accepted Answer

A)   Income
B)   Price
C)   Tastes and preferences
D)   Prices of other related goods and services

Question 9

What are the two main roles that physicians have in the health care industry?

Accepted Answer

The answer of What are the two main roles that...

Question 10

A horizontal demand curve reflects the condition that individuals will still demand and pay for the same quantity of healthcare services as prices increase.

Accepted Answer

A) True 
 B)False

Question 11

Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate arc price elasticity of demand?

Accepted Answer

A)   -3.7
B)   -0.9
C)   -1.4
D)   -1.1

Question 12

A complementary good or service is one whose use is generally accompanied by the use of the good or service in question

Accepted Answer

A) True 
 B)False

Question 13

An outward shift in demand is called an increase in demand.

Accepted Answer

A) True 
 B)False

Question 14

The present value of a benefit of $10,000 that occurred in 4 years, discounted at a rate of 8% would be $6,800.

Accepted Answer

A) True 
 B)False

Question 15

If the price of a physician visit is $75, and individual A's own demand for visits is 10 visits, individual B's own demand for visits is 12 visits, individual A demands 4 visits for individual B, and individual C demands 2 visits for Individual A, what is the social demand for physician visits?

Accepted Answer

A)   28 visits
B)   26 visits
C)   22 visits
D)   20 visits

Exam 4: Demand for Health and Medical Care

Explain the difference between the slope of a demand curve and the elasticity of demand.

The change in total utility resulting from a unit change in the consumption of a good or services is called

A model is a complete description of reality.

Price elasticity of demand is designed to measure the responsiveness of demand to a price change at a given point or between two given points on a single demand curve.

For a normal good, there is a direct relationship between price and quantity demanded.

Measures of ability to purchase healthcare services include:

In the demand model, the endogenous variable is:

What are the two main roles that physicians have in the health care industry?

A horizontal demand curve reflects the condition that individuals will still demand and pay for the same quantity of healthcare services as prices increase.

Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate arc price elasticity of demand?

A complementary good or service is one whose use is generally accompanied by the use of the good or service in question

An outward shift in demand is called an increase in demand.

The present value of a benefit of $10,000 that occurred in 4 years, discounted at a rate of 8% would be $6,800.

If the price of a physician visit is $75, and individual A's own demand for visits is 10 visits, individual B's own demand for visits is 12 visits, individual A demands 4 visits for individual B, and individual C demands 2 visits for Individual A, what is the social demand for physician visits?