Deck 4: Demand for Health and Medical Care

Question 1

In the demand model, the endogenous variable is:

A) Income
B) Price
C) Tastes and preferences
D) Prices of other related goods and services

Answer 1

B

Question 2

Measures of ability to purchase healthcare services include:

A) An individual's earnings in a specific time period
B) An individual's level of wealth
C) An individual's after-tax income
D) A and C only
E) A, B, and C

Answer 2

E

Question 3

The change in total utility resulting from a unit change in the consumption of a good or services is called

A) Absolute utility
B) Diminishing marginal utility
C) Marginal utility
D) None of the above

Answer 3

C

Question 4

If the price of a physician visit is $75, and individual A's own demand for visits is 10 visits, individual B's own demand for visits is 12 visits, individual A demands 4 visits for individual B, and individual C demands 2 visits for Individual A, what is the social demand for physician visits?

A) 28 visits
B) 26 visits
C) 22 visits
D) 20 visits

Question 5

Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate arc price elasticity of demand?

A) -3.7
B) -0.9
C) -1.4
D) -1.1

Question 6

A model is a complete description of reality.

Question 7

The present value of a benefit of $10,000 that occurred in 4 years, discounted at a rate of 8% would be $6,800.

Question 8

An outward shift in demand is called an increase in demand.

Question 9

A complementary good or service is one whose use is generally accompanied by the use of the good or service in question

Question 10

A horizontal demand curve reflects the condition that individuals will still demand and pay for the same quantity of healthcare services as prices increase.

Question 11

For a normal good, there is a direct relationship between price and quantity demanded.

Question 12

Price elasticity of demand is designed to measure the responsiveness of demand to a price change at a given point or between two given points on a single demand curve.

Question 13

What are the two main roles that physicians have in the health care industry?

Question 14

Explain the difference between the slope of a demand curve and the elasticity of demand.

Question 15

Currently, there is a $0.50 copayment on drugs. The HMO has decided to raise this to $1.00 per prescription. The cost of a prescription is $6.00, which means the HMO's contribution to the total cost will fall from $5.50 to $5.00. Currently, the arc elasticity of demand is about -0.5 for prescriptions, and the HMO members use 2.2 prescriptions per capitA) How much will be de?manded after the new copayment is put into effect, and how much money will this save the HMO?