Question 1

Of the following high-income countries, which has the highest life expectancy at birth?

Accepted Answer

A)  Canada 
B)  Japan 
C)  the United Kingdom 
D)  the United States

Question 2

Explain why the rates of death due to kidney disease and diabetes has slightly increased in the United States since 1981.

Accepted Answer

The answer of Explain why the rates of death due...

Question 3

The overall decline in death rates in the United States since 1981 was due to all of the following except

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

Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is

Accepted Answer

A)  adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed. 
B)  moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed. 
C)  adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity. 
D)  moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity.

Question 5

Figure 7-5  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.
-The provision of the Patient Protection and Affordable Care Act (ACA) which states that, with limited exceptions, every resident of the United States must have health insurance that meets certain basic requirements is the ________ provision.

Accepted Answer

A)  employer mandate 
B)  state health exchanges 
C)  individual mandate 
D)  regulation of health insurance

Question 6

Over time, people in the United States and other high-income countries have, on average, become taller, which is an indication that their nutritional status has improved.

Accepted Answer

A) True 
 B)False

Question 7

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.

Question 8

In the United States in 2012, the percentage of firms that employed more than 200 workers and did not offer health insurance as a fringe benefit to the workers was about

Accepted Answer

A)  2%. 
B)  29%. 
C)  44%. 
D)  98%.

Question 9

Replacing employment-based health care with a government-run system could reduce employers payments for their workers insurance, but the amount that they would have to pay in overall compensation

Accepted Answer

A)  would remain essentially unchanged. 
B)  would dramatically increase. 
C)  would fall to zero. 
D)  would dramatically decrease.

Question 10

Why might a young, healthy person choose not to buy health insurance?

Accepted Answer

The answer of Why might a young, healthy person choose...

Question 11

Over the past 160 years in the United States, life expectancy

Accepted Answer

A)  has remained fairly constant. 
B)  has slightly declined. 
C)  has more than doubled. 
D)  increased up to the 1950s and then declined for the next 60 years.

Question 12

The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction is known as adverse selection.

Accepted Answer

A) True 
 B)False

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

In the United States in 2012, the percentage of people with some form of health insurance was about

Accepted Answer

A)  17%. 
B)  29%. 
C)  54%. 
D)  84%.

Question 15

Of the following high-income countries, which has the highest obesity rate?

Accepted Answer

A)  Canada 
B)  Japan 
C)  the United Kingdom 
D)  the United States

Question 16

In markets with asymmetric information,

Accepted Answer

A)  moral hazard causes adverse selection which in turn causes asymmetric information. 
B)  adverse selection causes moral hazard which in turn causes asymmetric information. 
C)  asymmetric information causes moral hazard and then it causes adverse selection. 
D)  asymmetric information causes adverse selection and then it causes moral hazard.

Question 17

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

Question 18

Briefly describe the types of health care systems in Canada, Japan, and the United Kingdom.

Accepted Answer

The answer of Briefly describe the types of health care...

Question 19

Article Summary
Administrative overhead costs resulting from insurance companies handling reimbursement claims is in large part the reason that health care in the United States is much more expensive than in other countries. An analysis on the administration costs of health care in the United States found that roughly 30 percent of the costs of health care are administrative and that more than 25 percent of health-sector employees work in administration. Health insurance companies are often paid a fixed percentage of the claims they administer, which gives them little to no impetus to increase efficiency and keep costs down.
Source: Jeffrey Pfeffer, "The Reason Health Care Is So Expensive: Insurance Companies," Bloomberg Businessweek, April 10, 2013.
-Refer to the Article Summary. Even if insurance companies were more efficient and brought administrative costs down, consumers would ________ the full cost of medical treatment. This would result in the market equilibrium price and quantity of medical services being ________ than the efficient equilibrium price and quantity.

Accepted Answer

A)  pay less than; less than 
B)  pay more than; less than 
C)  pay more than; more than 
D)  pay less than; more than

Question 20

Which of the following has not contributed 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

Exam 7: The Economics of Health Care