Deck 9: Market Power in Health Care

Question 1

Essential ingredients of market power are:

A) Ease with which buyers and sellers can weigh alternatives
B) Substantial availability of viable substitutes
C) Inability to influence terms of exchange
D) All of the above

Answer 1

A

Question 2

In a monopsonist market, the marginal cost of an additional unit of a good or services

A) Is lower than its price
B) Is higher than its price
C) Is the same as its price

Answer 2

B

Question 3

In a monopoly market, MR is positive only at those quantities that correspond to

A) The inelastic portion of the demand curve
B) The unit elastic portion of the demand curve
C) The elastic portion of the demand curve
D) None of the above

Answer 3

C

Question 4

In a monopolistic competition model, the fundamental conditions include:

A) There are few competitors and potential competitors in the market
B) Each firm can vary its product quality
C) There is no ability to develop consumer loyalty
D) All of the above

Question 5

If demand is price elastic, then an increase in price will cause

A) Total revenue to increase
B) Total revenue to stay the same
C) Total revenue to decrease
D) Impact is indeterminate

Question 6

Market power can only be wielded by sellers in the market.

Question 7

In a monopolistic market, demanders have close substitutes for the good or service.

Question 8

The profit-maximizing monopolist will set price and quantity such that its MR = MC.

Question 9

In a monopolists market, the more elastic the demand, the steeper the slope of the demand curve.

Question 10

Charging different prices for the same product to different buyers is called price discrimination.

Question 11

The acceptance by physicians of Medicare assignment relieves patients from the financial risks associated with higher physician fees.

Question 12

The demand for long-term care reflects a derived demand rather than a basic demand.

Question 13

From a structural perspective, what are the three market segments facing nursing home markets?

Question 14

What is the Herfindahl index (HI) in a market of three practices providing 10,000 visits, where one physician provides 5,000 visits, the second physician provides 3,000 visits, and the third physician provides 2,000 visits.

Question 15

What is an oligopolistic market and what are the results of such a market?