Deck 5: The Demand for Health and Medical Care

Question 1

Many economists consider medical care a superior good. Which of the following statements is true regarding a superior good?
a. Consumers want more of a superior good regardless of its price.
b. When the price of a superior good increases, consumers demand more of it.
c. As consumer income increases a larger percentage of that income is spent on superior goods.
d. A superior good has an income elasticity of demand greater than one.
e. Both c and d are true of superior goods.

Answer 1

Both c and d are true of superior goods.

Question 2

Health insurance features that tend to reduce moral hazard include
a. deductibles.
b. coinsurance
c. copayments
d. all of the above

Answer 2

all of the above

Question 3

The top ten causes of death in the United States in 2010 included all of the following but
a. heart disease.
b. cancer.
c. suicide.
d. kidney failure.
e. AIDS.

Answer 3

AIDS

Question 4

The accompanying diagram depicts the relationship between health status and medical care spending for a particular country. Which of the following statements is true?

a. At the current spending level of S₁ on TP₁, this society can get a greater improvement in health status by increasing spending to S₂ than by shifting TP to TP₂.
b. S₁ levels of spending may be described as spending on the flat-of-the-curve.
c. Social pressures will move the health care system to spend S₂.
d. All statements are true.
e. All statements are false.

Question 5

McKeown's 1976) research attributed the majority of the secular decline in mortality rates in Europe and North America to
a. better nutrition and housing.
b. improved sanitary conditions.
c. clean water and waste disposal.
d. reduced exposure to diseases.
e. better medical care.

Question 6

Suppose the recipient of a kidney transplant has stated that she would prefer 5 years of perfect health to the 10 years she expects to live with her transplant. For this person, each of her remaining 10 years of life has a QALY value of
a. ½.
b. 2.
c. 5.
d. 10.
e. 50.

Question 7

A critical assumption in the model of demand and supply is the independence of demand and supply curves. If the two are not independent, a shift in the supply curve can lead to a shift in the demand curve referred to as
a. supply-side economics.
b. supplier-induced demand.
c. supply shocks.
d. ceteris paribus.
e. the fallacy of supply.

Question 8

The RAND Health Insurance Study
a. examined cross-section data to estimate the demand function for medical care.
b. was the most extensive controlled experiment in health insurance ever conducted in the United States.
c. like most economic studies, was based on individual decisions in voluntarily choosing health insurance coverage.
d. was flawed due to severe self-selection bias.
e. was set up to study medical outcomes when individuals were free to choose the type of health coverage they desired.

Question 9

If health care spending is already on the flat-of-the-curve, it may not be possible to buy improved health status by increasing spending. In this situation, the best way to improve health status may be to
a. increase the availability of government health insurance.
b. invest in biotechnology to determine the genetic factors that improve health.
c. improve life-style decisions by reducing smoking, alcohol consumption, and drug use.
d. improve access to medical care.
e. improve overall educational attainment so people can better follow the advice from the medical community.

Question 10

The concept quality-adjusted life year QALY)
a. is a multidisciplinary approach to measuring health status.
b. has little application to medical decision making.
c. is used extensively in the U.S. to evaluate health care programs.
d. is used extensively to evaluate medical care resource allocation within government-run programs on fixed budgets, especially in Europe.
e. none of the above.

Question 11

Factors affecting medical care demand include
a. health status.
b. demographic characteristics.
c. economic standing.
d. physician factors.
e. all of the above.

Question 12

The following diagram depicts the market for physicians' services that is originally in equilibrium at point a with demand and supply at D₀ and S₀. As physician supply increases from S₀ to S₁, a concurrent shift in demand from D₀ to D₁
a. may be the result of physician-induced demand.
b. will cause overall spending on physicians' services to increase.
c. will force physicians to limit the number of patients they see.
d. both a and b.
e. all of the above.

Question 13

Health care that actually harms the patient, such as an adverse reaction to a prescription drug is called
a. morbidity-related response.
b. defensive medicine.
c. adverse selection.
d. iatrogenic disease.
e. moral hazard.

Question 14

The number one cause of death in the United States in 1980 was
a. AIDS.
b. heart disease.
c. cancer.
d. stroke.
e. homicide and accidents.

Question 15

A physician's ability to induce demand is greatly enhanced when
a. patients pay their own medical bills.
b. patients request follow-up visits.
c. patients have difficulty gathering and processing information.
d. the physician follows strict treatment guidelines.
e. treatment options are limited.