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?

Accepted Answer

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?

Accepted Answer

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.

Accepted Answer

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

Accepted Answer

The price floor above the equilibrium causes an economic surplus where the wage will equal the price floor and the quantity will equal the quantity demanded.

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

Accepted Answer

The price floor is below the equilibrium;therefore,the market clears where demand intersects with supply.

Question 6

Which of the following is true?

Accepted Answer

The key difference between a dynamic and static shortage is whether additions to the stock of physicians occur over time.A dynamic shortage will eventually resolve itself;a static shortage requires intervention,since entry into the profession is prevented from occurring.

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?

Accepted Answer

The answer of Suppose Medicare no longer subsidizes residency programs.Instead,the...

Question 8

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

Accepted Answer

You want to continue hiring inputs from hire marginal product per dollar categories until the marginal product per dollar of the last input is equal to that of all other inputs.

Question 9

Regulators and advocates argue that licensure is appropriate because it:

Accepted Answer

Although licensure leads to higher rents for health professionals,it protects consumers from harm or low-quality care.

Question 10

Friedman and Kuznets found that physicians earn

Accepted Answer

The authors' research,undertaken in the early 1930s,found that physicians earned,on average,32% per year 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?

Accepted Answer

The answer of Suppose the federal government would like to...

Question 12

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

Accepted Answer

By 1980,the total number of physicians per 100,000 population reached 195;it is currently 284 (2007).

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?

Accepted Answer

(100,000)(.02)(10)/2000 = 10.

Question 14

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

Accepted Answer

The quantity will definitely increase,but a small increase in demand and a large increase in supply will lead to a decrease in wages,while a large increase in demand and a small increase in supply will lead to an increase in wages.

Question 15

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

Accepted Answer

The answer of What are the potential pitfalls of using...

Question 16

Policy intervention is needed to resolve a

Accepted Answer

A dynamic shortage is a temporary shortage that is resolved over time via market forces.A static shortage is present when a shortage exists in the long-run equilibrium of the market.

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.

Accepted Answer

The price ceiling is below the equilibrium price,therefore,w = $120.At this price,only 40 physicians will enter the market,which will lead to a shortage.

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?

Accepted Answer

(200,000)(.02)(10)/2000 = 20.

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