Question 1

Supply curves are positively-sloped because of

Accepted Answer

The supply curve is positively sloped primarily due to the law of diminishing returns, which states that as more units of a variable input are added to fixed inputs, the additional output from each new unit of input eventually decreases, leading to higher costs and thus higher prices needed to supply additional quantities.

Question 2

Within the framework of economics, optimization means providing a good or service until

Accepted Answer

Optimization in economics typically occurs when marginal benefits equal marginal costs, as this is the point where net benefits are maximized.

Question 3

An inferior good

Accepted Answer

An inferior good is characterized by a negative income elasticity, meaning demand decreases as income increases, causing the demand curve to shift left.

Question 4

Which of the following will not cause a shift in the medical care supply curve?

Accepted Answer

A change in the percentage of the population with health insurance affects the demand for medical care, not the supply. The other options affect factors related to the supply side, such as costs and availability of resources.

Question 5

Suppose the market for hospital outpatient treatment is in equilibrium when a price ceiling is set below the equilibrium price. What do you expect to happen?

Accepted Answer

A price ceiling set below the equilibrium price will lead to a shortage because the quantity demanded will exceed the quantity supplied at the lower price.

Question 6

Suppose the demand curve for medical care services is perfectly inelastic. What will happen to the equilibrium price and quantity if supply increases?

Accepted Answer

When demand is perfectly inelastic, quantity demanded does not change with price changes. Therefore, an increase in supply will lower the price, but the quantity will remain the same.

Question 7

Which of the following will not change the demand for office visits to the physician?

Accepted Answer

A change in the price of an office visit affects the quantity demanded, not the demand itself, which is influenced by factors like consumer preferences, income, and external conditions.

Question 8

Suppose robotic technology improves the results of abdominal surgery-less time to perform the surgery, faster recovery times, and fewer mistakes. What is the impact on the market for abdominal surgery using this new technology?

Accepted Answer

The improvements in surgery outcomes and efficiency will likely increase the demand for robot-assisted surgery as patients and hospitals seek better results.

Question 9

The price of services at Urban General falls by 10 percent.

Accepted Answer

The answer of The price of services at Urban General...

Question 10

Suppose the U.S. Drug Enforcement Agency steps up its efforts to control the illegal importation of cocaine into the United States. What is the likely effect on the market for illegal drugs in the United States?

Accepted Answer

When the DEA increases efforts to control cocaine importation, the supply decreases, leading to higher prices and lower quantities available in the market.

Question 11

The following graph depicts the market for CT scanners in the United States. Assume an initial equilibrium at D₁ and S₁ with price of $200,000 per machine. If the government places a $20,000 excise tax on each new scanner sold, the new equilibrium price will be

Accepted Answer

The answer of The following graph depicts the market for...

Question 12

The price of services at St. Elsewhere falls by 10 percent. What happens to the quantity of services demanded at Urban General?

Accepted Answer

If the price of services at St. Elsewhere falls, it may attract customers away from Urban General, leading to a decrease in the quantity of services demanded at Urban General.

Question 13

Area income increases by 20 percent.

Accepted Answer

Area income increases, so the demand for healthcare services will increase. Urban General is a normal good, so the quantity demanded will increase as well.

Question 14

A shortage of hospital beds will likely lead to

Accepted Answer

A shortage of hospital beds typically leads to an increase in the price of a hospital stay due to higher demand and limited supply.

Question 15

Suppose angioplasty and coronary artery bypass graft CABG) surgery are substitute treatment alternatives for coronary artery disease. What should happen to the equilibrium price and quantity of angioplasty procedures if a new CABG technique is introduced that is less invasive requiring a 4 inch incision under the breast bone rather than cracking open the patient's rib cage) and requires one-third the recovery period of regular CABG surgery.

Accepted Answer

The introduction of a less invasive and more efficient CABG technique makes CABG a more attractive substitute for angioplasty, leading to a decrease in demand for angioplasty. This results in a decrease in both the equilibrium price and quantity of angioplasty procedures.

Question 16

What is the cumulative effect of a simultaneous increase in area income of 5 percent and a 10 percent increase in prices at Urban General?

Accepted Answer

The answer of What is the cumulative effect of a...

Question 17

A physician's office expenses increases 10 percent, so she decides to raise the price of office visits. Assuming the demand curve for office visits does not shift, what will happen to the total number of office visits and practice revenues?

Accepted Answer

The answer of A physician's office expenses increases 10 percent,...

Question 18

The dead-weight loss from an excise tax

Accepted Answer

The dead-weight loss from an excise tax is the lost economic efficiency when the equilibrium outcome is not achievable due to the tax, leading to higher prices and lower output.

Quiz 2: Using Economics to Study Health Care Issues