Deck 9: Government, Health, and Medical Care

Question 1

Suppose a hospital agrees not to charge an insurer a higher price than any other insurer. This would be an example of a _______.

A) exclusive dealing contract
B) most favored nation clause
C) tying contract
D) price ceiling
E) both a and b

Answer 1

B

Question 2

If a price ceiling on physician services is going to be effective, it must be set ______ the competitive market equilibrium price to prevent the market from driving the price _______.

A) below; up
B) below; down
C) equal to; up
D) above; down
E) above; up

Answer 2

A

Question 3

Public goods are considered to be both _______ and _______.

A) rival; excludable
B) rival; costly
C) non-rival; excludable
D) excludable; costly
E) non-rival; non-excludable

Answer 3

E

Question 4

Industrial pollution is an example of _______.

A) positive demand-side externality
B) negative supply-side externality
C) no externality
D) negative demand-side externality
E) positive supply-side externality

Question 5

The U.S. federal income tax is _______, and therefore provides incentives for higher income individuals to purchase _______ amounts of employer-sponsored health insurance.

A) progressive; smaller
B) regressive; larger
C) regressive; smaller
D) progressive; larger
E) None of the above

Question 6

Medicare and Medicaid are both demand-side subsidies.

Question 7

If a price ceiling in a competitive market for physician services is effective, it will result in a market ______ of physician services due to the _______ price.

A) surplus; lower
B) surplus; higher
C) shortage; higher
D) shortage; lower
E) none of the above

Question 8

A price ceiling will increase the quantity of medical care produced in a monopoly market.

Question 9

Government funding of medical schools is an example of a supply-side subsidy.

Question 10

Suppose a government decides to subsidize flu vaccinations in an attempt to correct a market failure. Without this government intervention, the flu vaccination would most likely be ______ due to the presence of _______.

A) over-consumed; negative externalities
B) under-consumed; positive externalities
C) over-consumed; positive externalities
D) under-consumed; negative externalities
E) none of the above

Question 11

Flu vaccinations are an example of _______.

A) positive demand-side externality
B) negative supply-side externality
C) no externality
D) negative demand-side externality
E) positive supply-side externality

Question 12

Penalties levied on consumers for the purchase of "Cadillac" health insurance plans are meant to correct for the positive externalities associated with these plans.

Question 13

Medical care is a public good, as it is both non-rival and non-excludable.

Question 14

Suppose a manufacturer of artificial hips required any medical care provider to purchase a specific set of surgical tools along with each artificial hip. This would be an example of a _______.

A) exclusive dealing contract
B) most favored nation clause
C) tying contract
D) price ceiling
E) both a and b

Question 15

Cigarette smoking is an example of _______.

A) positive demand-side externality
B) negative supply-side externality
C) no externality
D) negative demand-side externality
E) positive supply-side externality