Question 1

The moral hazard problem created by health insurance induces consumers to underconsume health care.

Accepted Answer

A) True 
 B)False

Question 2

If the existence of health insurance increases one's incentive to use the health care system more intensively, this is an illustration of

Accepted Answer

A)  the adverse selection problem.
B)  the moral hazard problem.
C)  the benefits-received principle.
D)  the Coase theorem.E) A) and B)
F) None of the above

Question 3

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 D₂ to D₁?

Accepted Answer

A)  an aging population
B)  loss of medical insurance benefits by part-time workers and early retirees
C)  expansion of the Medicaid program
D)  higher medical malpractice premiumsE) A) and B)
F) A) and C)

Question 4

The demand for health care in industrially advanced economies is

Accepted Answer

A)  highly elastic with respect to both price and income.
B)  highly inelastic with respect to both price and income.
C)  highly elastic with respect to income but highly inelastic with respect to price.
D)  about unit elasticity with respect to income and relatively inelastic with respect to price.E) All of the above
F) C) and D)

Question 5

Based on the available elasticity evidence, health care

Accepted Answer

A)  is an inferior good.
B)  is a normal good.
C)  is highly elastic with respect to price.
D)  has a price elasticity of demand of 1.E) A) and B)
F) A) and C)

Question 6

The provision of health insurance leads to a deadweight loss due to an overallocation of resources to health care.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following provisions of the PPACA do proponents expect to reduce the growth of health care spending?

Accepted Answer

A)  prohibiting insurers from dropping or denying individuals with preexisting conditions
B)  allowing individuals to purchase coverage through insurance exchanges
C)  subsidizing purchases of insurance for those complying with the personal mandate
D)  expanding access to Medicaid coverageE) C) and D)
F) A) and C)

Question 8

The recently enacted health care reform package (the Patient Protection and Affordable Care Act)focuses solely on controlling health care costs.

Accepted Answer

A) True 
 B)False

Question 9

One of the taxes included in the Patient Protection and Affordable Care Act (PPACA)to generate revenue is a tax on junk food.

Accepted Answer

A) True 
 B)False

Question 10

Preferred provider organizations (PPOs)

Accepted Answer

A)  charge a fixed amount per member, hire many of their own physicians, and provide health services only to members.
B)  require that their members give up the right to file medical malpractice suits.
C)  are illegal in several states.
D)  require physicians and hospitals to provide discounted prices for their services as a condition for being included in the insurance plan.E) A) and D)
F) All of the above

Question 11

The moral hazard problem created when consumers acquire health insurance leads them to

Accepted Answer

A)  take more care of their health.
B)  consume more health care services.
C)  seek less care from their physicians.
D)  exercise more and eat healthier food.E) C) and D)
F) B) and C)

Question 12

Refer to the diagram. Physicians likely would argue that health care should be provided to patients in

Accepted Answer

A)  some amount less than Q₁.
B)  amount Q₁.
C)  some amount between Q₁ and Q₂.
D)  amount Q₂.E) B) and C)
F) A) and C)

Question 13

Singapore's health care system includes the following major elements, except

Accepted Answer

A)  government mandates designed to promote competition on price and quality among health care providers.
B)  high out-of-pocket costs to consumers.
C)  laws requiring people to save for future health expenditures.
D)  a national health insurance plan for its citizens provided by the government.E) C) and D)
F) A) and D)

Question 14

Suppose you go to a doctor but your health insurance plan does not reimburse you because you have not yet paid enough out of pocket for the year to qualify for insurance benefits. This is an example of

Accepted Answer

A)  coinsurance.
B)  a deductible.
C)  monopsony power.
D)  a deferred benefit plan.E) A) and B)
F) A) and C)

Question 15

One of the peculiarities of the U.S. market for health care is

Accepted Answer

A)  third-party payments by insurance companies.
B)  government-provided health insurance.
C)  government tax credits and vouchers for consumers to pay for health care.
D)  fee-for-service payments for all physician visits.E) B) and D)
F) All of the above

Question 16

Health maintenance organizations (HMOs)

Accepted Answer

A)  are based on the traditional fee-for-service system of paying physicians.
B)  charge a fixed amount per member, hire many of their own physicians, and provide health services only to members.
C)  are also known as preferred provider organizations.
D)  are illegal in several states.E) A) and D)
F) A) and B)

Question 17

The Patient Protection and Affordable Care Act (PPACA)sets up so-called insurance exchanges where consumers can compare various insurance policies that meet certain government-set standards.

Accepted Answer

A) True 
 B)False

Question 18

The health care industry includes the manufacture and sale of low-fat food.

Accepted Answer

A) True 
 B)False

Question 19

Most economists who have studied the health care industry have concluded that there is

Accepted Answer

A)  an underallocation of resources for health care in the United States.
B)  an overallocation of resources for health care in the United States.
C)  insufficient technological progress in the medical industry.
D)  a need for government price controls for physicians' fees.E) B) and D)
F) All of the above

Question 20

The price of medical care in the United States has

Accepted Answer

A)  remained relatively unchanged in recent years.
B)  risen slower than the overall price level.
C)  risen at the same pace as the overall price level.
D)  risen faster than the overall price level.E) A) and B)
F) A) and C)

Exam 24: Health Care

One of the taxes included in the Patient Protection and Affordable Care Act (PPACA)to generate revenue is a tax on junk food.

Correct AnswerverifiedShow Answer

The moral hazard problem created by health insurance induces consumers to underconsume health care.

Correct AnswerverifiedShow Answer

The provision of health insurance leads to a deadweight loss due to an overallocation of resources to health care.

Correct AnswerverifiedShow Answer

Refer to the diagram. Physicians likely would argue that health care should be provided to patients in

Correct AnswerverifiedShow Answer

The health care industry includes the manufacture and sale of low-fat food.

Correct AnswerverifiedShow Answer

Singapore's health care system includes the following major elements, except

Correct AnswerverifiedShow Answer

Suppose you go to a doctor but your health insurance plan does not reimburse you because you have not yet paid enough out of pocket for the year to qualify for insurance benefits. This is an example of

Correct AnswerverifiedShow Answer

If the existence of health insurance increases one's incentive to use the health care system more intensively, this is an illustration of

Correct AnswerverifiedShow Answer

Preferred provider organizations (PPOs)

Correct AnswerverifiedShow Answer

The recently enacted health care reform package (the Patient Protection and Affordable Care Act)focuses solely on controlling health care costs.

Correct AnswerverifiedShow Answer

The price of medical care in the United States has

Correct AnswerverifiedShow Answer

Most economists who have studied the health care industry have concluded that there is

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 D₂ to D₁?

Correct AnswerverifiedShow Answer

The moral hazard problem created when consumers acquire health insurance leads them to

Correct AnswerverifiedShow Answer

Which of the following provisions of the PPACA do proponents expect to reduce the growth of health care spending?

Correct AnswerverifiedShow Answer

Health maintenance organizations (HMOs)

Correct AnswerverifiedShow Answer

One of the peculiarities of the U.S. market for health care is

Correct AnswerverifiedShow Answer

The Patient Protection and Affordable Care Act (PPACA)sets up so-called insurance exchanges where consumers can compare various insurance policies that meet certain government-set standards.

Correct AnswerverifiedShow Answer

The demand for health care in industrially advanced economies is

Correct AnswerverifiedShow Answer

Based on the available elasticity evidence, health care

Correct AnswerverifiedShow Answer

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