Question 1

Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients.This practice of self-referral is an example of

A)moral hazard.
B)adverse selection.
C)res ipsa loquitor.
D)physician-induced demand.
E)cognitive dissonance.

physician-induced demand.

Accepted Answer

Physician-induced demand refers to the phenomenon where physicians order tests, procedures or other services that are not medically necessary, but are motivated by financial incentives. Self-referral is one of the most common forms of physician-induced demand, where physicians refer patients to facilities or services that they own or have a financial stake in, resulting in higher costs to patients and the healthcare system.

Question 2

The rate of return on an investment in medical education&#10;A)is inversely related to the length of time spent in formal schooling.&#10;B)is inversely related to income.&#10;C)will increase with an increase in the availability of student loans.&#10;D)is much higher than the rate of return on an undergraduate business degree.&#10;E)is inversely related to the number of years in the profession.

Accepted Answer

is inversely related to the length of time spent in formal schooling.

Question 3

Which of the following statements about the distribution of physicians among specialties is true in the United States?&#10;A)The majority of physicians specialize in general/family practice.&#10;B)There are twice as many generalists as there are specialists.&#10;C)There are twice as many specialists as there are generalists.&#10;D)The specialty distribution in the U.S.is similar to that of the rest of the world.&#10;E)None of the above.

Accepted Answer

In the United States, there are generally more specialists than generalists, with specialists often outnumbering generalists by a significant margin.

Question 4

Starting salaries for female OB/GYNs are higher than those of male OB/GYNs.What is the best explanation for this?&#10;A)Female OB/GYNs have more human capital than male OB/GYNs.&#10;B)Female OB/GYNs are smarter than male OB/GYNs.&#10;C)The demand for female OB/GYNs is greater than the demand for male OB/GYNs.&#10;D)The demand for female OB/GYNs is less than the demand for male OB/GYNs.&#10;E)More males are in OB/GYN residency programs than females.

Accepted Answer

This is the most likely explanation because there is evidence to suggest that patients often prefer female OB/GYNs, particularly for sensitive procedures or personal issues. This, in turn, can result in a higher demand for female OB/GYNs and allow them to negotiate higher salaries.

Question 5

Federal government involvement in training physicians&#10;A)is limited to financing indigent care at teaching hospitals.&#10;B)begins with the accreditation of medical schools and extends to physicians' licensing.&#10;C)is extensive with physicians receiving an average of over $70,000 in subsidies by the time they finish their residency programs.&#10;D)effectively limits the number of students admitted to medical school each year.&#10;E)all of the above are true.

Accepted Answer

The federal government provides significant financial support for medical education, including subsidies for residency programs, which can average over $70,000 per physician.

Question 6

The observed variations in practice patterns in different regions of the country are difficult to eliminate&#10;A)because of the many alternative treatment options available for most ailments.&#10;B)due to the localized nature of most medical practice.&#10;C)because it is difficult to change the preferences of physicians and patients.&#10;D)the observed variations are so minor that they are of little concern to policy makers.&#10;E)responses a, b, and c are all true.

Accepted Answer

The practice patterns in different regions of the country are difficult to eliminate because of the many alternative treatment options available for most ailments (a), the localized nature of most medical practice (b), and the difficulty in changing the preferences of physicians and patients (c). Therefore, responses a, b, and c are all true. The observed variations may also have varying degrees of significance, but the fact that they are observed means they are of concern to policy makers.

Question 7

What is the most significant cost of attending medical school?&#10;A)Tuition and fees.&#10;B)Books and incidentals.&#10;C)The income foregone.&#10;D)Room and board.&#10;E)Pain and suffering.

Accepted Answer

The income foregone is the most significant cost of attending medical school as it involves not only the direct cost of tuition and fees, but also the opportunity cost of the time spent studying instead of working in a paid job. This is especially relevant for medical students who typically spend several years in school and residency programs before becoming fully licensed and practicing physicians. The lost income during this period can be significant and should be factored into the decision to pursue a medical education.

Question 8

Which of the following would increase the supply of physicians?&#10;A)Increasing the cost of attending medical school.&#10;B)More scholarships and grants to cover medical school tuition.&#10;C)Increasing the medical school entrance requirements to include 15 hours of economics.&#10;D)Making it easier for plaintiffs to prove medical malpractice claims.&#10;E)Paying medical schools to eliminate residency opportunities in some specialties.

Accepted Answer

More scholarships and grants to cover medical school tuition would make it easier and more affordable for individuals to attend medical school, thus increasing the supply of physicians. Increasing the cost of attending medical school would have the opposite effect, as it would deter individuals from pursuing a career in medicine. Increasing entrance requirements and making it easier for plaintiffs to prove medical malpractice claims may have some impact on the supply of physicians, but it is unlikely to be significant. Paying medical schools to eliminate residency opportunities in some specialties would decrease the supply of physicians in those specialties, which is not the goal of increasing the overall supply of physicians.

Question 9

An important element in estimating the present value of an investment is the calculation of the discount factor.The discount factor may be expressed as _______ where r is the discount rate and n is the number of years the investment is held.

A)(1 + r)ⁿ
B)(1 + n)^r
C)1/(1 + r)ⁿ
D)1/(1 + n)^r

Accepted Answer

The correct formula to calculate discount factor is 1/(1 + r)^n, where r is the discount rate and n is the number of years the investment is held. Option C represents this formula correctly. Option A has some incorrect symbols and option B incorrectly uses (1+n) instead of (1+r). Option D incorrectly uses (1+n) instead of (1+r) and also places the n in the numerator instead of the exponent.

Question 10

Legislation considered by the 104^th Congress to restrict legal immigration would have A)improved employment prospects for native-born Americans. B)allowed more Americans trained abroad to compete for openings in U.S.residency programs. C)raised the costs of operating many of the nation's rural and inner-city hospitals. D)had little effect on medical markets since so few physicians practicing medicine in the U.S are foreigners. E)surprised many policy makers if it had passed since the 104^th Congress found it difficult to agree on much of anything.

Accepted Answer

Restricting legal immigration would have led to fewer foreign doctors coming to the United States, which would have raised the costs of operating many of the nation's rural and inner-city hospitals that rely heavily on foreign medical graduates. Therefore, C is the correct answer. Choices A, B, D, and E are incorrect because they either suggest benefits that are not related to medical staffing or are irrelevant to the question being asked.

Question 11

Empirical studies that suggest differences in utilization rates between fee-for-service and managed care plans&#10;A)are unreliable due to statistical biases.&#10;B)conclude that financial incentives are not the reason for differences in the amount of care physician provide.&#10;C)show no differences in health status among patient groups.&#10;D)are unable to differentiate between the impacts due to financial incentives and those due to clinical rules.

Accepted Answer

The answer of Empirical studies that suggest differences in utilization...

Question 12

Surgical specialists earn more than general/family practice physicians.Which of the following statements is not true regarding this income differential?&#10;A)Surgeons earn more because their practice costs, including medical malpractice insurance is higher.&#10;B)Surgeons earn more to compensate them for the extra years spent as residents.&#10;C)Physicians' incomes are determined to a large extent by supply and demand conditions with respect to each specialty.&#10;D)Surgeons will always earn more than general practitioners because they are smarter than general practitioners.&#10;E)Surgeons earn more than general practitioners because cutting into people is messy.

Accepted Answer

The answer of Surgical specialists earn more than general/family practice...

Question 13

Suppose the market for nursing services in a local community is so dominated by a singly community hospital that for all practical purposes it is considered a monopsony.Using the diagram below

If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be?

A)W₁ and E₁.
B)W₂ and E₀.
C)W₀ and E₀.
D)W₀ and E₁.
E)W₀ and E₂.

Accepted Answer

The answer of Suppose the market for nursing services in...

Question 14

Suppose the number of medical school graduates continues to increase over the next decade.Which of the following is true?&#10;A)Physicians' salaries must fall.&#10;B)Physicians' salaries must rise.&#10;C)Physicians' salaries will fall only if the demand for medical services falls.&#10;D)Physicians' salaries will fall if the demand for medical services rises more than the supply of physicians rises.&#10;E)Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises.

Accepted Answer

The answer of Suppose the number of medical school graduates...

Question 15

Suppose the market for nursing services in a local community is so dominated by a singly community hospital that for all practical purposes it is considered a monopsony.Using the diagram below

What is the equilibrium wage and level of employment under monopsony?

A)W₁ and E₁.
B)W₂ and E₀.
C)W₀ and E₀.
D)W₀ and E₁.
E)W₀ and E₂.

Accepted Answer

The answer of Suppose the market for nursing services in...

Question 16

Physicians salaries increased substantially over the decade 1995-2005 from an average of $215,000 to $315,000.What is the best explanation for this?&#10;A)Physicians were smarter in 2005 than in 1995.&#10;B)The supply of physicians has increased.&#10;C)The supply of physicians has decreased.&#10;D)The demand for physicians has increased.&#10;E)The demand for physicians has decreased.

Accepted Answer

The answer of Physicians salaries increased substantially over the decade...

Question 17

Input demand is called derived demand because&#10;A)demand for an input is derived from demand for the product or service it produces.&#10;B)demand for an input is derived from its availability in the input market.&#10;C)demand for the output produced is also derived from consumer demand.&#10;D)input demand actually determines how much output is produced.

Accepted Answer

The answer of Input demand is called derived demand because&#10;A)demand...

Deck 8: The Physicians Servic ES Market