Question 1

Which statement accurately describes an assumption underlying the successful operation of markets?&#10;A)Individuals' tastes for goods and services are predetermined.&#10;B)Individuals are not always rational.&#10;C)Individuals are often overwhelmed by conflicting information.&#10;D)Individuals are highly influenced by professional advice.

Accepted Answer

Individuals' tastes for goods and services being predetermined is an assumption underlying the successful operation of markets because it implies that consumer preferences are stable and predictable, allowing producers to efficiently allocate resources and produce goods and services that meet these preferences.

Question 2

Which aspect of Assumption 1 does the text describe as the more troubling issue in health care?&#10;A)Individuals can effectively use available information to achieve a best-off position.&#10;B)Individuals know what goods and services are likely to make them best off.&#10;C)Individuals are rational.&#10;D)Individuals fail to respond to the logical arguments of providers.

Accepted Answer

The text describes the issue of individuals being able to effectively use available information to achieve a best-off position as more troubling because it implies a challenge in processing and utilizing complex health information to make optimal decisions.

Question 3

Which partial sentence best describes a counterfactual question?&#10;A)What would have happened if &#8230;?&#10;B)Why did &#8230; happen?&#10;C)Who is responsible for &#8230;?&#10;D)Who would provide the best &#8230;?

Accepted Answer

A counterfactual question is asking about what could have happened if something was different, and the phrase "what would have happened if" is a clear indicator of this type of question. The other options do not necessarily have to do with counterfactual scenarios.

Question 4

The viewpoint that government regulations are instituted to help the public is called the ____.&#10;A)public interest model&#10;B)economic theory of regulation&#10;C)public choice theory&#10;D)life cycle theory

Accepted Answer

The public interest model proposes that government regulations are instituted to serve the best interests of the public as a whole. This viewpoint assumes that regulators act impartially and prioritize societal welfare over the interests of any particular group or industry. This stands in contrast to the economic theory of regulation, which suggests that regulations are enacted to benefit certain industries or special interests. Public choice theory, on the other hand, holds that regulations are the result of the interplay between regulators, interest groups, and politicians, each of whom seeks to advance their own self-interest. The life cycle theory, finally, maintains that regulations are influenced by where an industry is in its life cycle, with regulation increasing as an industry matures.

Question 5

Philip Musgrove developed a list of five ways in which government can intervene in a market. Of these, government regulation is ____.&#10;A)the second-least intrusive&#10;B)the most intrusive&#10;C)the least intrusive&#10;D)the second-most intrusive

Accepted Answer

The answer of Philip Musgrove developed a list of five...

Question 6

Under a market-based economic model, competition is designed to ____.&#10;A)enhance efficiency&#10;B)improve equity&#10;C)incorporate social justice&#10;D)level the playing field

Accepted Answer

Under a market-based economic model, competition among firms is intended to increase efficiency and productivity, as firms attempt to lower costs and offer better products or services to attract customers. This can lead to benefits such as lower prices, higher quality goods, and improved innovation. While market-based systems may also incorporate elements of equity and fairness, such as through regulations or social welfare programs, competition itself is primarily focused on economic efficiency.

Question 7

Arthur, an elderly and ailing man, has stated his preference to his family that he wants all possible life-extending procedures. In an economist's view, Arthur's preference is ____.&#10;A)unlikely to change&#10;B)dependent on his family's response&#10;C)likely to change after discussion with his physician&#10;D)dependent on the cost of the procedures involved

Accepted Answer

The economist's view would be that Arthur's preference is unlikely to change because he has already stated his preference to his family, indicating a strong conviction about his decision. The economist would not take into account the family's response or the cost of the procedures involved, as those factors do not affect Arthur's own stated preference. The economist may acknowledge that discussion with his physician could potentially affect Arthur's preference, but given that Arthur has already stated a clear preference, it is unlikely to change.

Question 8

Which statement best describes the Affordable Care Act's effort to reduce the number of uninsured?&#10;A)It relies on both the private market and government action.&#10;B)It relies primarily on the private market.&#10;C)It relies solely on government action.&#10;D)It develops a third and new path, the insurance exchange.

Accepted Answer

The Affordable Care Act's effort to reduce the number of uninsured relies on both the private market and government action. It creates new regulations for private insurance companies and expands public programs like Medicaid, while also establishing the insurance exchange as a new option for individuals to purchase insurance.

Question 9

Which statement best describes the use of &#34;report cards&#34; to compare health plans?&#10;A)They provide aggregated information rather than for particular medical conditions.&#10;B)They attract consumers to better-rated health plans.&#10;C)They make clear to consumers the relative importance of survival rates for various conditions.&#10;D)They provide insufficient detail to satisfy consumers' demands.

Accepted Answer

Report cards typically provide aggregated information such as overall quality ratings and member satisfaction scores for health plans, rather than specific information on medical conditions.

Answer: B 
 Some consumers may be attracted to health plans with better ratings and choose to enroll in them.

Answer: D 
 While report cards provide useful information for consumers, they may not satisfy all consumer demands for detailed information on specific medical conditions or providers. Therefore, they are not sufficient to fully satisfy all consumer demands.

Option C is incorrect. While some report cards may include survival rates for some medical conditions, this is not a common metric used in most report cards. Additionally, survival rates may not be the most important factor for consumers when choosing a health plan.

Question 10

Which statement best describes Pareto optimality?&#10;A)It is impossible to make someone better off without making someone else worse off.&#10;B)It is possible to make someone better off without making someone else worse off.&#10;C)Each person is as well off as they can be.&#10;D)Each person is as close to parity as they can be.

Accepted Answer

Pareto optimality, or Pareto efficiency, is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off. This concept is a fundamental idea in the field of economics, especially in the study of welfare economics.

Question 11

A problem of supply-side methods is ____.&#10;A)potentially longer waits for services&#10;B)consumers' difficulty in making informed choices&#10;C)selection of healthy individuals over sicker individuals&#10;D)overuse of services

Accepted Answer

The answer of A problem of supply-side methods is ____.&#10;A)potentially...

Question 12

Demand-side policies are ____.&#10;A)favored by those who believe in market solutions&#10;B)favored by those who believe in greater government regulatory action&#10;C)exemplified by limits on the number of hospital beds&#10;D)not by their nature regressive

Accepted Answer

The answer of Demand-side policies are ____.&#10;A)favored by those who...

Question 13

Maria is concerned that vaccinations may put her child at risk; however, she follows her pediatrician's recommended schedule of vaccinations in part because she believes that the community as a whole is protected by a high vaccination rate. Her response is an example of a ____.

A)positive externality of consumption
B)negative externality of consumption
C)market failure
D)free rider problem

Accepted Answer

The answer of Maria is concerned that vaccinations may put...

Question 14

The role of government in the market place is best described as ____.&#10;A)dependent on the circumstances&#10;B)undesirable because of its paternalism&#10;C)efficient because of economies of scale&#10;D)strong because of its rulemaking powers

Accepted Answer

The answer of The role of government in the market...

Question 15

The purpose of high-deductible health plans is to ____.&#10;A)make people think twice before using services&#10;B)redistribute income from healthier to sicker people&#10;C)increase the utility of persons using the services&#10;D)redistribute income from higher income to lower income people

Accepted Answer

The answer of The purpose of high-deductible health plans is...

Deck 2: Markets and Politics in Health Care