Question 1

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.E) B) and D)
F) A) and D)

Question 2

In the United States in 2012,the percentage of firms that employed more than 200 workers and offered health insurance as a fringe benefit to the workers was about

Accepted Answer

A)   29%.
B)   42%.
C)   61%.
D)   98%.E) B) and C)
F) All of the above

Question 3

In the United States from 1981 to 2011,deaths from all of the following declined substantially except

Accepted Answer

A)   cancer.
B)   kidney disease.
C)   heart attacks.
D)   strokes.E) A) and D)
F) C) and D)

Question 4

Which of the following parties is likely to have the most information about the health of an individual who is trying to purchase a health insurance policy?

Accepted Answer

A)   the company that issues the health insurance policy
B)   the individual who is applying for the health insurance policy
C)   the employer of the individual who is trying to purchase the health insurance policy
D)   All parties in the health insurance market have access to the same level of information.E) B) and D)
F) B) and C)

Question 5

Consider a used car market in which half the cars are good and half are bad (lemons) .If buyers are rational,the prices being offered for used cars will result in

Accepted Answer

A)   an equal proportion of a good cars and lemons being sold in an efficient market.
B)   a larger proportion of good cars being sold and consequently, consumer surplus is increased.
C)   a larger proportion of lemons being sold and consequently, producer surplus is increased.
D)   an equal proportion of good cars and lemons being sold in an inefficient market.E) None of the above
F) B) and C)

Question 6

Consider a used car market in which half the cars are good and half are bad (lemons) .A rational buyer in this market should

Accepted Answer

A)   offer to pay a price equal to the most she would pay for a good car.
B)   offer to pay a price equal to the most she would pay for a lemon.
C)   offer to pay a price somewhere between the price she would pay for a good car and the price she would pay for a lemon.
D)   save up and buy a new car.E) A) and D)
F) B) and C)

Question 7

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

Accepted Answer

A)   asymmetric information.
B)   market signaling.
C)   moral hazard.
D)   adverse selection.E) C) and D)
F) A) and C)

Question 8

In the United States in 2012,about two-thirds of those who were not covered by health insurance

Accepted Answer

A)   are single and unemployed.
B)   live in families in which at least one member has a job.
C)   live in families in which all members are unemployed.
D)   are retired from the workforce.E) B) and D)
F) A) and B)

Question 9

The aging of the U.S.population has tended to ________ spending on health care,and the development of new drugs and medical equipment has tended to ________ spending on health care.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; increase
D)   decrease; decreaseE) B) and C)
F) A) and C)

Question 10

The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is

Accepted Answer

A)   inefficient market hypothesis.
B)   moral hazard.
C)   information disparity.
D)   asymmetric information.E) B) and D)
F) C) and D)

Question 11

What is the main difference between a single-payer health care system and socialized medicine?

Accepted Answer

A single-payer health care system,such a...

Question 12

If consumers paid the full price of medical services instead of using health insurance and third-party payers to cover part of the cost,the quantity of medical services provided would increase.

Accepted Answer

A) True 
 B)False

Question 13

All of the following are part of the "taxes" provision of the Patient Protection and Affordable Care Act (ACA) except

Accepted Answer

A)   pharmaceutical firms and health insurance firms will pay new taxes.
B)   investors earning more than $200,000 will pay a new tax on their investment income.
C)   beginning in 2018, all taxes on employer-provided health insurance plans will be reduced or eliminated.
D)   workers earning more than $200,000 will have their share of the Medicare payroll tax increase.E) A) and D)
F) A) and C)

Question 14

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

Accepted Answer

A)   fee-for-service plans.
B)   preferred provider organizations.
C)   single-health-payer systems.
D)   health maintenance organizations.E) A) and B)
F) A) and C)

Question 15

In which of the following countries are substantial co-payments typically required as a part of the health care system?

Accepted Answer

A)   Canada and the United States
B)   Japan and Canada.
C)   the United States and Japan
D)   the United States and the United KingdomE) None of the above
F) A) and D)

Question 16

The overall mortality rate in the United States has remained fairly constant for the past 30 years.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)   Canada
B)   Japan
C)   the United Kingdom
D)   the United StatesE) B) and C)
F) None of the above

Question 18

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Accepted Answer

A) True 
 B)False

Question 19

What is adverse selection?

Accepted Answer

A)   It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus.
B)   It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.
C)   It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
D)   It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.E) None of the above
F) B) and C)

Question 20

Which of the following is not an advantage of risk pooling?

Accepted Answer

A)   By insuring large groups as opposed to individuals, health insurance providers reduce adverse selection.
B)   It gives very sick people in the group the same access to health care and to pay the same premiums as healthy individuals.
C)   It is easier for an insurance company to estimate the average number of claims likely to be filed under a group policy than it is to predict the number of claims likely to be filed under an individual policy.
D)   Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services.E) None of the above
F) B) and C)

Exam 7: The Economics of Health Care

What is adverse selection?

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The overall mortality rate in the United States has remained fairly constant for the past 30 years.

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The aging of the U.S.population has tended to ________ spending on health care,and the development of new drugs and medical equipment has tended to ________ spending on health care.

Correct AnswerverifiedShow Answer

In the United States in 2012,about two-thirds of those who were not covered by health insurance

Correct AnswerverifiedShow Answer

Consider a used car market in which half the cars are good and half are bad (lemons) .A rational buyer in this market should

Correct AnswerverifiedShow Answer

Which of the following parties is likely to have the most information about the health of an individual who is trying to purchase a health insurance policy?

Correct AnswerverifiedShow Answer

In the United States in 2012,the percentage of firms that employed more than 200 workers and offered health insurance as a fringe benefit to the workers was about

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the United States from 1981 to 2011,deaths from all of the following declined substantially except

Correct AnswerverifiedShow Answer

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Correct AnswerverifiedShow Answer

Consider a used car market in which half the cars are good and half are bad (lemons) .If buyers are rational,the prices being offered for used cars will result in

Correct AnswerverifiedShow Answer

All of the following are part of the "taxes" provision of the Patient Protection and Affordable Care Act (ACA) except

Correct AnswerverifiedShow Answer

In which of the following countries are substantial co-payments typically required as a part of the health care system?

Correct AnswerverifiedShow Answer

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

Correct AnswerverifiedShow Answer

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

Correct AnswerverifiedShow Answer

What is the main difference between a single-payer health care system and socialized medicine?

Correct AnswerverifiedA single-payer health care system,such a...View AnswerShow Answer

The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is

Correct AnswerverifiedShow Answer

If consumers paid the full price of medical services instead of using health insurance and third-party payers to cover part of the cost,the quantity of medical services provided would increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of risk pooling?

Correct AnswerverifiedShow Answer

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The aging of the U.S.population has tended to spending on health care,and the development of new drugs and medical equipment has tended to spending on health care.

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A single-payer health care system,such a...
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