Deck 14: Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

Question 1

Suppose a student is trying to decide if they should become a physician or an accountant.As an accountant,the student would earn $75,000 after four years of education.On the other hand,if the student decides to become a physician,they would need to attend school for 11 years.Each year of school costs $20,000 in both professions.As a physician,the student would earn $100,000.In both cases,the student only has 20 years to work and/or attend school.What should they do?

Answer 1

For the accountant,we need to complete the following:
4 years of school = 4*20,000 = 80,000
The accounting student can work for (20 - 4 =)16 years.So the income earned is
16*75,000 = 1,200,000
Net benefit is $1,200,000 - $80,000 = $1,120,000
For the physician,the cost of schooling is
11*20,000 = $220,000.
The physician can only work for (20 - 11 =)9 years
So the income earned is 9*100,000 = $900,000
Net benefit is $900,000 - $220,000 = $680,000

Question 2

Which of the following is a normative statement?

A)Nonprofit hospitals are inefficient
B)Physicians should be more cost conscious
C)Government-sponsored health insurance will provide lower premiums
D)All of the above

Answer 2

B
A normative statement is a statement of opinion,but a positive (even a false one)is a statement of fact that can be tested.

Question 3

Explain how the current market for residencies is anticompetitive and how market competition would correct the current situation.

Answer 3

The residency market,however,is not a competitive market.In addition to the distorting effects of Medicare's FFS payment system that rewards procedure-oriented specialties more highly and the economic interest of hospitals in their preference for specialist residencies,the number and types of residencies are limited.The most sought-after residency positions have not expanded in response to increased demands.Many medical students have been unsuccessful in entering specialty residencies with high rates of return.It is likely that to maintain high rates of return in certain specialties,residency review committees will have to limit the number of specialty residencies available to hospitals.The continued specialists' high rates of return are likely the result of entry barriers and limits on residency positions in those specialties.
Until a competitive market in residencies can be achieved,the number of residency positions and their distribution will be influenced by the economic interests of hospitals and the different physician specialties.

Question 4

Suppose the demand for labor is w = 300 - 2Q and the supply of labor is w = Q.If a price floor is set at $200,then the equilibrium

A)Wage is $100 and quantity is 100
B)Wage is $100 and quantity is 50
C)Wage is $200 and quantity is 100
D)Wage is $200 and quantity is 50

Question 5

Suppose the demand for labor is w = 300 - 2Q and the supply of labor is w = Q.If a price floor is set at $50,then the equilibrium

A)Wage is $100 and quantity is 100
B)Wage is $100 and quantity is 50
C)Wage is $50 and quantity is 100
D)Wage is $50 and quantity is 50

Question 6

Which of the following is true?

A)Dynamic shortages are resolved over time
B)Static shortages are resolved overtime
C)Both a and b
D)Neither a nor b

Question 7

Suppose Medicare no longer subsidizes residency programs.Instead,the residents must pay for the education.Who will pay more,general practitioners or specialists?

Question 8

If the marginal product per dollar of physicians is lower than practical nurses,we should:

A)hire more physicians,because they are more productive
B)hire more practical nurses,because their marginal productivity per dollar is higher
C)hire more of each,because they have positive marginal productivity per dollar
D)hire fewer of each to lower costs

Question 9

Regulators and advocates argue that licensure is appropriate because it:

A)Ensures that patients get high-quality care
B)Increases remuneration to those with the licenses
C)Reduces the incidence of deficient care
D)Both a and c

Question 10

Friedman and Kuznets found that physicians earn

A)32% less than dentists
B)About the same as dentists
C)32% more than dentists

Question 11

Suppose the federal government would like to protect health professional jobs by only allowing U.S.citizens to hold positions in hospitals,regardless of where they trained.Is this a good policy? Why or why not?

Question 12

The number of physicians per 100,000 has risen between 1980 to 2007 by

A)More than 50%
B)Between 50% and 25%
C)Less than 25%

Question 13

Bullet County has 100,000 residents.During any given year,2% of the population will develop a medical condition that requires 10 hours of physician treatment.Assuming the average physician works 2,000 hours per year,how many physicians are needed in Bullet County?

A)6
B)10
C)14
D)20

Question 14

Which of the following will occur if labor demand and supply simultaneously increase?

A)An increase in equilibrium wages and ambiguous change in the equilibrium quantity of labor
B)An ambiguous change in equilibrium wages and equilibrium quantity of labor
C)An ambiguous change in equilibrium wages and an increase in the equilibrium quantity of labor
D)A decrease in equilibrium wages and an increase in the equilibrium quantity of labor

Question 15

What are the potential pitfalls of using the ratio technique to determine shortages/surpluses?

Question 16

Policy intervention is needed to resolve a

A)Dynamic shortage
B)Static shortage
C)Both a and b
D)Neither a nor b

Question 17

Assume the government imposes price controls on physician wages where the wage cannot exceed $120.Let the demand for labor be w = 500 - Q and the supply of labor is w = 3Q.

A)Wage is $375 and quantity is 125
B)Wage is $375 and quantity is 40
C)Wage is $120 and quantity is 380
D)Wage is $120 and quantity is 40

Question 18

Jefferson County has 200,000 residents.During any given year,2% of the population will develop a medical condition that requires 10 hours of physician treatment.Assuming the average physician works 2,000 hours per year,how many physicians are needed in Jefferson County?

A)6
B)12
C)14
D)20