Question 1

All other things equal, greater popularity of the view that health care is a right will

Accepted Answer

A)  increase the demand for health care.
B)  decrease the demand for health care.
C)  increase the supply of health care.
D)  decrease the supply of health care.E) B) and D)
F) A) and D)

Question 2

When the United States is described as having a dual system of health care, this means that

Accepted Answer

A)  government provides basic health insurance for all Americans and private insurance covers services beyond the basic level.
B)  high-quality care is provided in urban areas, but care in rural areas is of poor quality.
C)  those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care.
D)  the high-risk segment of the population is required to have health insurance, while the low-risk sector is not.E) A) and B)
F) A) and C)

Question 3

The dollar sum of costs that an insured individual must pay before the insurer begins to pay would be considered

Accepted Answer

A)  copayments.
B)  play-or-pay.
C)  fee for service.
D)  deductibles.E) A) and D)
F) A) and B)

Question 4

Health care spending was about what percentage of U.S. GDP in 2017?

Accepted Answer

A)  45 percent
B)  32 percent
C)  18 percent
D)  8 percentE) A) and B)
F) All of the above

Question 5

Refer to the graph of a hypothetical market for health care. Assume that health insurance pays four-fifths of the cost of health care. The consumer will end up consuming how many units of health care and pay (out-of-pocket) how much for it per unit?

Accepted Answer

A)  600 units, for $20 per unit
B)  450 units, for $40 per unit
C)  300 units, for $60 per unit
D)  450 units, for $80 per unitE) All of the above
F) A) and D)

Question 6

Which of the following constituted the largest share of total health care spending in 2017?

Accepted Answer

A)  physicians
B)  hospitals
C)  nursing homes
D)  prescription drugsE) A) and C)
F) All of the above

Question 7

Assume that health insurance pays three-fourths of the cost of health care. Under this type of system, there will be allocative

Accepted Answer

A)  efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society equals the marginal benefit.
B)  efficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost.
C)  inefficiency because consumers pay a price below market equilibrium and receive a quantity at which the marginal cost to society exceeds the marginal benefit.
D)  inefficiency because consumers pay a price above market equilibrium and receive a quantity at which the marginal benefit to society exceeds the marginal cost.E) A) and C)
F) A) and B)

Question 8

Health care costs have tended to rise more rapidly in the United States than in Canada because

Accepted Answer

A)  state insurance regulators in the United States do not face the budget constraints that national regulators in Canada face.
B)  people in the United States want more health care than people in Canada.
C)  private insurance in the United States encourages overconsumption of health care; public insurance in Canada does not.
D)  Canada has better achieved economies of scale in the production of health care.E) All of the above
F) B) and C)

Question 9

Roughly how much of health care spending in the U.S. in 2017 was financed by private and public insurance?

Accepted Answer

A)  20 percent
B)  41 percent
C)  60 percent
D)  75 percentE) B) and D)
F) B) and C)

Question 10

Refer to the diagram, which shows the market for U.S. health care. Other things equal, which of the following would shift the demand curve for medical care from D₁ to D₂?

Accepted Answer

A)  higher copayments and deductibles in insurance policies
B)  an aging population
C)  cutbacks in the government's Medicaid program
D)  restrictions by firms on the eligibility of part-time workers for medical benefitsE) B) and C)
F) None of the above

Question 11

If the provision of medical insurance encourages people to take more health risks because they know they can receive treatment, then health insurance

Accepted Answer

A)  produces an asymmetric information problem.
B)  leads to a universal access problem.
C)  causes a defensive medicine problem.
D)  creates a moral hazard problem.E) A) and D)
F) A) and C)

Question 12

Refer to the graph of a hypothetical market for health care. The efficiency loss caused by the provision of health insurance covering four-fifths of the cost is

Accepted Answer

A)  $3,000.
B)  $6,000.
C)  $12,000.
D)  $24,000.E) A) and B)
F) C) and D)

Question 13

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Accepted Answer

A)  the free-rider problem.
B)  the moral hazard problem.
C)  the adverse selection problem.
D)  the Coase theorem.E) A) and D)
F) B) and C)

Question 14

The fee-for-service arrangement for paying doctors is one way to reduce health care costs.

Accepted Answer

A) True 
 B)False

Question 15

The demand for health care is highly elastic with respect to both price and income.

Accepted Answer

A) True 
 B)False

Question 16

Explain how changes in incomes contribute to increasing health care costs.

Accepted Answer

Because health care is a normal good, in...

Question 17

The table shows the hypothetical demand and supply schedule for health care. The efficiency loss caused by the availability of health insurance paying one-third of the cost is

Accepted Answer

A)  $400.
B)  $75,000.
C)  $15,000.
D)  $100.E) C) and D)
F) B) and D)

Question 18

One major difference between PPOs (preferred providers organizations) and HMOs (health maintenance organizations) is that

Accepted Answer

A)  PPOs set rates for various medical services or procedures, while HMOs allow their doctors and clinics to set their own rates.
B)  PPOs seek to reduce health care costs by controlling prices, while HMOs seek to reduce costs by restricting quantity consumed.
C)  HMOs employ their own physicians or contract for specialized services with outside providers, while PPOs have arrangements with a network of providers.
D)  HMOs seek to reduce costs by capping the rates for various services, while PPOs seek to ration health care by having waiting periods.E) A) and C)
F) All of the above

Question 19

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

Accepted Answer

A) True 
 B)False

Question 20

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be

Accepted Answer

A)  10,000.
B)  16,000.
C)  13,000.
D)  20,000.E) A) and D)
F) A) and C)

Exam 24: Health Care

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

Correct AnswerverifiedShow Answer

The fee-for-service arrangement for paying doctors is one way to reduce health care costs.

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Assume that health insurance pays three-fourths of the cost of health care. Under this type of system, there will be allocative

Correct AnswerverifiedShow Answer

Explain how changes in incomes contribute to increasing health care costs.

Correct AnswerverifiedBecause health care is a normal good, in...View AnswerShow Answer

The demand for health care is highly elastic with respect to both price and income.

Correct AnswerverifiedShow Answer

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be

Correct AnswerverifiedShow Answer

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Correct AnswerverifiedShow Answer

Refer to the graph of a hypothetical market for health care. Assume that health insurance pays four-fifths of the cost of health care. The consumer will end up consuming how many units of health care and pay (out-of-pocket) how much for it per unit?

Correct AnswerverifiedShow Answer

All other things equal, greater popularity of the view that health care is a right will

Correct AnswerverifiedShow Answer

The dollar sum of costs that an insured individual must pay before the insurer begins to pay would be considered

Correct AnswerverifiedShow Answer

Refer to the graph of a hypothetical market for health care. The efficiency loss caused by the provision of health insurance covering four-fifths of the cost is

Correct AnswerverifiedShow Answer

Roughly how much of health care spending in the U.S. in 2017 was financed by private and public insurance?

Correct AnswerverifiedShow Answer

The table shows the hypothetical demand and supply schedule for health care. The efficiency loss caused by the availability of health insurance paying one-third of the cost is

Correct AnswerverifiedShow Answer

One major difference between PPOs (preferred providers organizations) and HMOs (health maintenance organizations) is that

Correct AnswerverifiedShow Answer

When the United States is described as having a dual system of health care, this means that

Correct AnswerverifiedShow Answer

Which of the following constituted the largest share of total health care spending in 2017?

Correct AnswerverifiedShow Answer

If the provision of medical insurance encourages people to take more health risks because they know they can receive treatment, then health insurance

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows the market for U.S. health care. Other things equal, which of the following would shift the demand curve for medical care from D₁ to D₂?

Correct AnswerverifiedShow Answer

Health care spending was about what percentage of U.S. GDP in 2017?

Correct AnswerverifiedShow Answer

Health care costs have tended to rise more rapidly in the United States than in Canada because

Correct AnswerverifiedShow Answer

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Because health care is a normal good, in...
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