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 _______.&#10;A) exclusive dealing contract&#10;B) most favored nation clause&#10;C) tying contract&#10;D) price ceiling&#10;E) both a and b

Accepted Answer

The agreement not to charge an insurer a higher price than any other insurer is an example of a most favored nation clause, which requires the hospital to offer the same price to all insurers. This helps prevent price discrimination and promotes competition among insurers. Exclusive dealing contracts, tying contracts, and price ceilings are not applicable to this scenario.

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 _______.&#10;A) below; up&#10;B) below; down&#10;C) equal to; up&#10;D) above; down&#10;E) above; up

Accepted Answer

A price ceiling to be effective must be set below the competitive market equilibrium price to prevent the market from driving the price up. This is because a price ceiling is a maximum price that can be charged for a product or service, and setting it below the equilibrium price ensures that the price does not rise above this maximum limit.

Question 3

Public goods are considered to be both _______ and _______.&#10;A) rival; excludable&#10;B) rival; costly&#10;C) non-rival; excludable&#10;D) excludable; costly&#10;E) non-rival; non-excludable

Accepted Answer

Public goods are characterized by being non-rival (one person's consumption does not reduce the amount available for others) and non-excludable (it is not possible to prevent anyone from consuming the good).

Question 4

Industrial pollution is an example of _______.&#10;A) positive demand-side externality&#10;B) negative supply-side externality&#10;C) no externality&#10;D) negative demand-side externality&#10;E) positive supply-side externality

Accepted Answer

Industrial pollution is a negative supply-side externality because it is a cost imposed on society by industrial producers. The producers do not bear the full cost of the pollution they emit, and this cost is shifted to society in the form of health problems, environmental damage, and reduced quality of life.

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.&#10;A) progressive; smaller&#10;B) regressive; larger&#10;C) regressive; smaller&#10;D) progressive; larger&#10;E) None of the above

Accepted Answer

The U.S. federal income tax is progressive, meaning that individuals with higher incomes are taxed at higher rates. This system provides an incentive for higher income individuals to purchase larger amounts of employer-sponsored health insurance because the premiums for such insurance are often excluded from taxable income, thus reducing their overall tax burden.

Question 6

Medicare and Medicaid are both demand-side subsidies.

Accepted Answer

Medicare and Medicaid are both programs that provide financial assistance to those who are in need of healthcare services. These subsidies are considered to be demand-side because they help to increase the demand for healthcare services by making it more affordable for people to access them.

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.&#10;A) surplus; lower&#10;B) surplus; higher&#10;C) shortage; higher&#10;D) shortage; lower&#10;E) none of the above

Accepted Answer

A price ceiling, when set below the equilibrium price, leads to a shortage because the lower price increases the quantity demanded while decreasing the quantity supplied.

Question 8

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

Accepted Answer

The answer of A price ceiling will increase the quantity...

Question 9

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

Accepted Answer

Government funding of medical schools increases the supply of trained medical professionals, which 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

Accepted Answer

Flu vaccinations are typically under-consumed due to the presence of positive externalities. When an individual gets vaccinated, they not only protect themselves but also reduce the likelihood of transmitting the flu to others, creating a benefit for society that the individual may not consider when deciding whether to get vaccinated.

Question 11

Flu vaccinations are an example of _______.&#10;A) positive demand-side externality&#10;B) negative supply-side externality&#10;C) no externality&#10;D) negative demand-side externality&#10;E) positive supply-side externality

Accepted Answer

The answer of Flu vaccinations are an example of _______.&#10;A)...

Question 12

Penalties levied on consumers for the purchase of &#34;Cadillac&#34; health insurance plans are meant to correct for the positive externalities associated with these plans.

Accepted Answer

The answer of Penalties levied on consumers for the purchase...

Question 13

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

Accepted Answer

The answer of Medical care is a public good, as...

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 _______.&#10;A) exclusive dealing contract&#10;B) most favored nation clause&#10;C) tying contract&#10;D) price ceiling&#10;E) both a and b

Accepted Answer

The answer of Suppose a manufacturer of artificial hips required...

Question 15

Cigarette smoking is an example of _______.&#10;A) positive demand-side externality&#10;B) negative supply-side externality&#10;C) no externality&#10;D) negative demand-side externality&#10;E) positive supply-side externality

Accepted Answer

The answer of Cigarette smoking is an example of _______.&#10;A)...

Deck 9: Government, Health, and Medical Care