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University of South Carolina HSPM 412 quiz 1)Which of the following is not a characteristic that makes medical care different from other commodities?   a

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University of South Carolina

HSPM 412 quiz

1)Which of the following is not a characteristic that makes medical care different from other commodities?

 

a.            Demand for medical care is irregular.

b.            Providers have more information than consumers.

c.             Providers and consumers have full and complete information about effectiveness.

d.            The transaction itself is filled with uncertainty.

 

2.            Opportunity cost is a measure of

 

a.            monetary direct cost of good or service. b. value based on the alternative not chosen.

c. value in terms of the cost of production.

d. the difference between production cost and resource cost.

 

3.            Scarcity means

 

a.            that firms can fulfill all their wants and needs.

b.            that individuals can fulfill only their wants.

c.             that individuals can fulfill all their wants and needs.

d.            that society has limited resources.

 

 

4.            What are the two main problems in health care markets?

 

a.            the growing number of uninsured, and the rising cost of health care.

b.            the rising cost of health care, and the declining quality of health care.

c.             the declining quality of health care, and the growing number of uninsured.

d.            increasing wait times for care, and the rising cost of health care.

 

 

5.            A market failure arises when

 

a.            free markets deliver prices consumers feel are to high to pay. b. free markets fail to promote the efficient use of resources.

c. free markets do not sell goods at prices producers feel are fair.

d. free markets operate at a place where supply equals demand.

 

6.            An appendectomy is an operation to have your appendix removed. Assume a competitive market and use the supply and demand framework to analyze the following situation in the market for appendectomies. Suppose that demand curve for appendectomies is perfectly inelastic

 

(i.e. vertical), and that there is a technological breakthrough that allows surgeons to perform appendectomies much faster and more easily. What will happen to the equilibrium price and quantity of appendectomies?

 

a.            the equilibrium price will fall and the equilibrium quantity will increase.

b.            the equilibrium price will rise and the equilibrium quantity will remain unchanged

c.             the equilibrium price will rise and the equilibrium quantity will decrease.

d.            The equilibrium price will fall and the equilibrium quantity will remain unchanged.

 

 

Price

 

 

 

 

 

 

 

 

 

Quantity

 

Note, demand curve is vertical and technological innovation (since technology innovation is positive) this shifter of supply pushes the supply curve to the right. When supply shifts right the equilibrium price falls and quantity remains unchanged.

 

7.            Assume a competitive market for health care and use the supply and demand framework to analyze the following situation. Suppose that new legislation passes requiring higher payments to doctors. What will happen to the equilibrium price and quantity of health care?

a.            the equilibrium price will fall and the equilibrium quantity will increase.

b.            the equilibrium price will rise and the equilibrium quantity will remain unchanged

c.             the equilibrium price will rise and the equilibrium quantity will decrease.

d.            The equilibrium price will fall and the equilibrium quantity will remain unchanged.

 

 

 

In market for health care, the doctors are an input into health care, so the higher payments represent and increase in input costs. Supply curve shifts up and to the left when supply curve rises. This raises the equilibrium price and the equilibrium quantity decreases. There should be a picture of a leftward supply shift in lecture slides

 

on supply and demand.

 

 

 

8.            Suppose the market for hospital outpatient treatment is in equilibrium, then a binding

price ceiling is put in place. What do you expect to happen?

a.            A surplus will develop.

b.            A shortage will develop.

c.             Quantity demanded will decrease.

d.            The equilibrium number of outpatient visits will rise.

e.            The demand for outpatient procedures will fall.

 

 

9.            Suppose the market for hospital outpatient treatment is in equilibrium, then a binding

price floor is put in place. What do you expect to happen?

 

a.            A surplus will develop.

b.            A shortage will develop.

c.             Quantity demanded will increase.

d.            The equilibrium number of outpatient visits will rise.

e.            The demand for outpatient procedures will fall.

 

10.          Elasticity is

a.            a measure of how much buyers and sellers respond to changes in market conditions.

b.            the study of how the allocation of resources affects economic well-being.

c.             the maximum amount that a buyer will pay for a good.

d.            the value of everything a seller must give up to produce a good.

 

11.          Suppose researchers find that a 20 percent increase in the price of health care decreases the quantity demanded by 3 percent. Which of the following statements accurately describes the price elasticity of demand for health care:

 

a.            The elasticity is elastic with a magnitude of 0.15.

b.            The elasticity is inelastic with magnitude of 0.15.

c.             The elasticity is elastic with a magnitude of 6.66

d.            The elasticity is inelastic with a magnitude of 6.66

 

12.          Technical efficiency refers to:

 

a.            how well resources as used to promote firm welfare.

b.            when inputs are put to the most rewarding use in society

c.             when inputs are used so that the marginal cost of production is less than or equal to the benefit received by consumers.

 

d.            when inputs achieve the least cost way to make a good or service for the firm.

 

13.          When an excise tax is implemented in a perfectly competitive market which of the following correctly identified what happens to welfare:

 

a.            consumer surplus increases.

b.            the market is considered to be efficient and total welfare is maximized.

c.             producer surplus increases.

d.            consumer surplus and produce surplus decrease.

 

14.          Non-excludable and non-rival goods are known as

a.            Public goods.

b.            Private goods.

c.             Efficient goods.

d.            There is no such thing as goods which are both non-excludable and non-rival.

 

15.          When a physician knows more about alternative treatments than her patients, we say that         exists.

a.            rational ignorance.

b.            perfect information.

c.             asymmetric information.

d.            moral hazard.

 

e.            adverse selection.

 

16.          Medical care that actually harms the patient, such as an adverse reaction to a prescription drug is called

a.            morbidity-related response.

b.            defensive medicine.

c.             iatrogenic disease.

d.            moral hazard.

 

17.          The accompanying diagram depicts the relationship between health status and medical care spending for a particular country. Which of the following statements is true?

 

Health Status

 

 

 

 

 

 

 

Medical Care Spending

S1           S2

 

a.            At the current spending level of S1 on TP1, this society can get a greater improvement in health status by increasing spending to S2 than by shifting TP to TP2.

b.            S1 levels of spending may be described as spending on the flat-of-the-curve.

c.             Factors such as technology, lifestyle, and environment can shift the curve from TP1 to TP2

d.            All statements are true.

 

18.          The direct costs in an economic evaluation include the all the following except

a.            hospitalization

b.            medical devices

c.             transportation to and from the physician’s office

d.            reduced productivity at work

e.            All of the above.

19.          Allocative efficiency refers to:

 

b.            how well resources as used to promote firm welfare.

c.             when inputs are put to the most reward using in society

d.            when inputs produce maximum output given the input combination.

e.            when inputs achieve the most productivity for the firm.

 

20.          Suppose researchers find that a 30 percent increase in health expenditure is associated with a 3 percent change in health in the United States. Which of the following statements accurately describes the elasticity of health with respect to health expenditure:

 

a.            The elasticity is elastic with a magnitude of 0.10.

b.            The elasticity is inelastic with magnitude of 0.10.

c.             The elasticity is elastic with a magnitude of 10

d.            The elasticity is inelastic with a magnitude of 10

 

 

e.            pursue new opening out of a concern for holding onto their insurance benefits.