Deck 5: An Overview of the Medical Care Sector

Question 1

Which type of market is not present in the medical care sector?

A)Institutional
B)Management
C)Manpower
D)Educational

Answer 1

B
As stated on page 3 of Chapter 3,the three types of markets in the medical care sector are Institutional,Manpower,and Educational.

Question 2

If the government would like to expand access to care,is it better to use a demand policy or a supply policy? Pay particular attention to the elasticity of each curve.

Answer 2

If the supply function is relatively inelastic compared to the demand function,then it will be very costly to expand access to care using a demand policy.On the other hand,if the supply function is relatively elastic,then a demand policy can be a useful tool to expand access to care.

Question 3

If wages for licensed practical nurses (LPNs)increase

A)The demand for LPNs increases
B)The demand for registered nurses increases
C)Both a and b
D)Neither a nor b

Answer 3

B
If the price of the substitute rises,then the demand for the good will increase as consumers will move away from the more expensive substitute.

Question 4

If the supply function in the medical sector is relatively elastic,then a rightward shift in demand will cause

A)Price to increase faster than quantity increases
B)Price to decrease faster than quantity increases
C)Price to increase slower than quantity increases
D)Price to decrease slower than quantity increases

Question 5

In an effort to control the size of hospitals,the government imposes a legal limit on the number of hospital beds that may be active.This policy will cause some hospitals to reduce the number of beds available.Explain how this policy change affects the three markets in the medical sector.

Question 6

If the supply function in the medical sector is relatively inelastic,then a rightward shift in demand will cause

A)Price to increase faster than quantity increases
B)Price to decrease faster than quantity increases
C)Price to increase slower than quantity increases
D)Price to decrease slower than quantity increases

Question 7

Consider an increase in the demand for dentures.As the supply curve becomes _____ elastic,the change in quantity supplied becomes_______.

A)More;smaller
B)More;larger
C)Less;larger
D)None of the above

Question 8

Currently,the federal government subsidizes medical education in the form of reimbursement for direct medical education (DME)and indirect medical education (IME)expenditures.These expenditures are reimbursed via Medicaid and Medicare.How would the three markets react to an elimination of this federal subsidy?

Question 9

Which one is in the correct order?

A)The demand for treatment → demand for institutions → demand for manpower
B)The demand for manpower demand for treatment → demand for institutions
C)Demand for institutions → demand for manpower→ demand for treatment
D)The demand for treatment → demand for manpower → demand for institutions

Question 10

The Balance Budget Act of 1997 for Medicare and Medicaid reduced the amount of funds residency programs could receive for instructing physicians in training.This has led to

A)A decrease in the supply of new physicians
B)An increase in the wages of current physicians
C)An increase in treatment prices
D)All of the above
E)None of the above

Question 11

A subsidy for home care services will

A)Increase the supply of home care nurses
B)Increase the supply of hospital nurses
C)Increase the demand for home care nurses
D)Increase the demand for hospital nurses

Question 12

What are the prices and quantities in each of the three markets of the medical sector?

Question 13

Suppose the state legislature passes a state mandate on mammography exams.Which of the following will occur?

A)The price of mammography exams will increase.
B)The wages of registered radiologic technologists will increase.
C)Both a and b.
D)Neither a nor b.

Question 14

A decrease in the demand for physical therapy will lead to

A)A decrease in the wages of physical therapists
B)A decrease in the number of physical therapist students
C)A decrease in the price for physical therapy
D)All of the above
E)None of the above

Question 15

If nurses and physicians are substitutes in the hospital production function,then an increase in the tuition to nursing school will

A)Increase the quantity demanded for both nurses and physicians.
B)Decrease the quantity demanded for both nurses and physicians.
C)Increase the quantity demanded for nurses,but decrease the demand for physicians.
D)Decrease the quantity demanded for nurses,but increase the demand for physicians.

Question 16

Explain the role of health insurance to expand access to care.Pay particular attention to the effect of health insurance on the elasticity of demand.

Question 17

The Balance Budget Act of 1997 for Medicare and Medicaid decreased the reimbursement rate for hospitals by the number of beds they had available.Hospitals responded by

A)Expanding the number of beds
B)Increasing their demand for input
C)Both a and b
D)Neither a nor b

Question 18

As the average age in the population increases,the demand for hospitals will __________ and the demand for nursing homes will ___________ .

A)Increase;increase
B)Increase;decrease
C)Decrease;decrease
D)Decrease;increase

Question 19

An increase in the demand for medical schools will

A)Increase the price of medical service
B)Increase the quantity of medical services
C)Both a and b
D)Neither a nor b

Question 20

If nurses and physicians are complements in the hospital production function,then an increase in the tuition to nursing school will

A)Increase the quantity demanded for both nurses and physicians.
B)Decrease the quantity demanded for both nurses and physicians.
C)Increases the quantity demanded for nurses,but decreases the demand for physicians.
D)Decreases the quantity demanded for nurses,but increases the demand for physicians.