Deck 16: The Market for Medical Education: Equity and Efficiency

Question 1

According to the graph, the social outcome is

Answer 1

A
The demand and the social cost curve intersect here.

Question 2

The net effect of the externality on welfare is equal to

A)d + f
B)i
C)h
D)i + d + f + h

Answer 2

B
The area (i)represents the costs to society due to over production.

Question 3

Let the private demand for medical research be P = 90-Q and let the supply for medical research equal P = Q.
a.Find the equilibrium price and quantity.
b.Suppose each unit of medical research has a positive externality such that the marginal social benefit is P = 90 - .5Q.What is the socially optimal level of research?

Answer 3

a.The answer is found by setting demand and supply equal and solving for quantity.
P = 90 - Q = Q
90 = 2Q
45 = Q
45 = P
b.Again,the answer is found by setting the marginal social benefit equal to supply and solving for the quantity.
P = 90 - .5Q = Q
90 = 1.5Q
60 = Q

Question 4

According to Prabhu and Edelman (2009),the private rate of return for a physician is

A)12 to 10%
B)9 to 7%
C)6 to 4%
D)3 to 1%

Question 5

An increase in the number of years needed to finish medical school

A)Shifts the demand for medical school to the left and decreases the number of physicians
B)Shifts the demand for medical school to the right and decreases the number of physicians
C)Leads to a decrease in quantity demanded
D)Leads to an increase in quantity demanded

Question 6

Currently,there is an

A)Excess supply of medical schools as indicated by the low price
B)Excess demand for medical education as indicated by the excess number of applications to medical school
C)Both a and b
D)Neither a nor b

Question 7

According to the graph, the private outcome is

Question 8

According to the graph, the market needs

A)No government intervention
B)A tax on production
C)A subsidy on production

Question 9

A new health reform bill proposes to reduce the shortage in primary care physicians by increasing the number of medical schools.This will lead to

A)An increase in the supply curve
B)An increase in the quantity demanded for medical school
C)Both a and b
D)Neither a nor b

Question 10

If medical schools are not using tuition to ration students,what mechanism is being used to ration students and to what end?

Question 11

What would be an economic justification for subsidizing a medical education?

Question 12

On average,medical school subsidies benefit people from

A)Higher-income families most
B)Middle-income families most
C)Lower-income families most

Question 13

How do we determine economic efficiency in the supply of medical schools?

Question 14

Currently,tuition paid by medical students constitutes

A)Less than 5% of total revenue
B)Less than 10% of total revenue
C)Less than 15% of total revenue
D)Less than 20% of total revenue

Question 15

According to the graph above, the market is experiencing

A)A positive externality
B)A negative externality
C)A private outcome that is the same as the socially optimal outcome

Question 16

Income Contingent Loan Repayment Plans (ICLRP)have been proposed to encourage medical school graduates to

A)Locate to a rural area
B)Work with underserved populations
C)Locate to an urban area
D)None of the above

Question 17

Tuition and fees cover

A)100% of medical school cost
B)75% to 50% of medical school cost
C)50% to 25% of medical school cost
D)Less than 25% of medical school cost

Question 18

The use of fluorine in public tap water to reduce cavities is an example of a

A)Negative externality
B)Positive externality
C)Public good
D)Private good

Question 19

What are some of the concerns associated with medical school tuition that reflect the true cost of a medical education?

Question 20

Large government subsidies allow medical schools to set tuition

A)Higher than the competitive price
B)Lower than the competitive price but above cost
C)Lower than the competitive price and below cost
D)None of the above