Question 1

What is moral hazard?

Accepted Answer

Moral hazard is a tendency for people to act in risky and reckless ways if they know that others will bear the burden of most or all of any bad consequences.

Question 2

Under the Small Business Health Options Program (SHOP)provision of the health care plan,a small firm's employees would be pooled with the employees of other small firms.When an insurance plan covers a large number of people,

Accepted Answer

A)  moral hazard is reduced. 
B)  adverse selection problems are reduced. 
C)  asymmetric information issues are eliminated. 
D)  negative externalities become more pronounced. 
A)  moral hazard is reduced. 
B)  adverse selection problems are reduced. 
C)  asymmetric information issues are eliminated. 
D)  negative externalities become more pronounced. B

Question 3

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (PPACA)except

Accepted Answer

A)  individuals with pre-existing medical conditions will be able to acquire health insurance. 
B)  all policies must provide coverage for dependant children up to age 26. 
C)  lifetime dollar maximums on coverage will be prohibited. 
D)  limits on the size of deductibles and on waiting periods before coverage takes effect will be eliminated. 
A)  individuals with pre-existing medical conditions will be able to acquire health insurance. 
B)  all policies must provide coverage for dependant children up to age 26. 
C)  lifetime dollar maximums on coverage will be prohibited. 
D)  limits on the size of deductibles and on waiting periods before coverage takes effect will be eliminated. D

Question 4

Which of the following is not an advantage of risk pooling?

Accepted Answer

A)  By insuring large groups as opposed to individuals, health insurance providers reduce adverse selection. 
B)  It gives very sick people in the group the same access to health care and to pay the same premiums as healthy individuals. 
C)  It is easier for an insurance company to estimate the average number of claims likely to be filed under a group policy than it is to predict the number of claims likely to be filed under an individual policy. 
D)  Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services. 
A)  By insuring large groups as opposed to individuals, health insurance providers reduce adverse selection. 
B)  It gives very sick people in the group the same access to health care and to pay the same premiums as healthy individuals. 
C)  It is easier for an insurance company to estimate the average number of claims likely to be filed under a group policy than it is to predict the number of claims likely to be filed under an individual policy. 
D)  Individuals who are insured and therefore do not have to pay the full cost of health care services may be inclined to over-use those services.

Question 5

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

Accepted Answer

Data problems: Countries do not always c

Question 6

If a state requires all drivers to purchase auto insurance,insurance companies still face the problem of

Accepted Answer

A)  correctly pricing their insurance. 
B)  sunk costs. 
C)  adverse selection. 
D)  excess demand for their insurance. 
A)  correctly pricing their insurance. 
B)  sunk costs. 
C)  adverse selection. 
D)  excess demand for their insurance.

Question 7

What is an externality? Explain how someone receiving a meningitis vaccination is an example of an externality in the market for health care.

Accepted Answer

An externality is a benefit or cost that

Question 8

Changes in the health of the average person are an important indicator of changes in the standard of living.

Accepted Answer

A) True 
 B)False

Question 9

In the principal-agent relationship,the agent is

Accepted Answer

A)  the owner of a resource that has hired another party to act on his behalf. 
B)  the person who is placed in control over resources that are not his own, with a contractual obligation to use these resources in the interests of some other party. 
C)  the person who is placed in control over resources that are not his own and agrees to compensate the resource owner in the event of outcomes that do not satisfy the resource owner. 
D)  the person who places his resources in professional hands in exchange for the professional's promise to act on the resource owner's behalf. 
A)  the owner of a resource that has hired another party to act on his behalf. 
B)  the person who is placed in control over resources that are not his own, with a contractual obligation to use these resources in the interests of some other party. 
C)  the person who is placed in control over resources that are not his own and agrees to compensate the resource owner in the event of outcomes that do not satisfy the resource owner. 
D)  the person who places his resources in professional hands in exchange for the professional's promise to act on the resource owner's behalf.

Question 10

Suggest three ways by which health insurance companies can reduce adverse selection?

Accepted Answer

Some ways by which insurance companies c

Question 11

How do current tax laws in the United States favor employer-based health care insurance?

Accepted Answer

A)  Individuals who receive health insurance benefits are allowed to deduct the value of these benefits from their taxable income. 
B)  Employers who provide health insurance benefits are reimbursed by the government and are not taxed on these reimbursements. 
C)  Individuals who receive health insurance benefits do not pay taxes on the value of these benefits. 
D)  Health insurance companies that provide insurance to employers are subject to a lower tax rate than those insurance companies that provide insurance to private individuals. 
A)  Individuals who receive health insurance benefits are allowed to deduct the value of these benefits from their taxable income. 
B)  Employers who provide health insurance benefits are reimbursed by the government and are not taxed on these reimbursements. 
C)  Individuals who receive health insurance benefits do not pay taxes on the value of these benefits. 
D)  Health insurance companies that provide insurance to employers are subject to a lower tax rate than those insurance companies that provide insurance to private individuals.

Question 12

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor's office,

Accepted Answer

A)  they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. 
B)  they demand a smaller quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. 
C)  the doctors supply a smaller quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service. 
D)  the insurance companies provide a larger quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service. 
A)  they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. 
B)  they demand a smaller quantity of health care services than they would if they paid a price that better represented the true cost of providing the service. 
C)  the doctors supply a smaller quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service. 
D)  the insurance companies provide a larger quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service.

Question 13

Compared to other high-income countries,health care spending per person in the United States has been

Accepted Answer

A)  growing at a faster rate. 
B)  declining at a faster rate. 
C)  growing at approximately the same rate. 
D)  declining at approximately the same rate. 
A)  growing at a faster rate. 
B)  declining at a faster rate. 
C)  growing at approximately the same rate. 
D)  declining at approximately the same rate.

Question 14

On average,people in high-income countries ________ than people in low-income countries.

Accepted Answer

A)  have a shorter life expectancy 
B)  are subject to a higher infant mortality rate 
C)  are taller 
D)  are exposed to more severe diseases 
A)  have a shorter life expectancy 
B)  are subject to a higher infant mortality rate 
C)  are taller 
D)  are exposed to more severe diseases

Question 15

Some economists and policymakers who are in favor of government-provided health care believe that providing health care will generate

Accepted Answer

A)  additional moral hazard. 
B)  positive externalities. 
C)  greater asymmetric information. 
D)  more adverse selection. 
A)  additional moral hazard. 
B)  positive externalities. 
C)  greater asymmetric information. 
D)  more adverse selection.

Question 16

How can improvements in health increase a country's total income?

Accepted Answer

Improvements in health make it possible

Question 17

A doctor pursuing his own interests rather than the interests of his patients is an example of the principal-agent problem.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that in a market for used cars,there are good used cars and bad used cars (lemons).Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon.Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each.Buyers cannot tell if a used car is reliable or is a lemon.Based on this information,what is the likely outcome in the market for used cars?

Accepted Answer

A)  Sellers of good used cars will drop out of the market. 
B)  Sellers of good used cars will incur losses. 
C)  Sellers of lemons will drop out of the market. 
D)  Used cars will sell for $3,000. 
A)  Sellers of good used cars will drop out of the market. 
B)  Sellers of good used cars will incur losses. 
C)  Sellers of lemons will drop out of the market. 
D)  Used cars will sell for $3,000.

Question 19

One effect of adverse selection in a market is that the equilibrium quantity of the product may
be smaller than it would have been if there were no information problems.

Accepted Answer

A) True 
 B)False

Question 20

Over the past 160 years in the United States,life expectancy

Accepted Answer

A)  has remained fairly constant. 
B)  has slightly declined. 
C)  has more than doubled. 
D)  increased up to the 1950s and then declined for the next 60 years. 
A)  has remained fairly constant. 
B)  has slightly declined. 
C)  has more than doubled. 
D)  increased up to the 1950s and then declined for the next 60 years.

What is moral hazard?

Under the Small Business Health Options Program (SHOP)provision of the health care plan,a small firm's employees would be pooled with the employees of other small firms.When an insurance plan covers a large number of people,

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (PPACA)except

Which of the following is not an advantage of risk pooling?

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

If a state requires all drivers to purchase auto insurance,insurance companies still face the problem of

What is an externality? Explain how someone receiving a meningitis vaccination is an example of an externality in the market for health care.

Changes in the health of the average person are an important indicator of changes in the standard of living.

In the principal-agent relationship,the agent is

Suggest three ways by which health insurance companies can reduce adverse selection?

How do current tax laws in the United States favor employer-based health care insurance?

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor's office,

Compared to other high-income countries,health care spending per person in the United States has been

On average,people in high-income countries ________ than people in low-income countries.

Some economists and policymakers who are in favor of government-provided health care believe that providing health care will generate

How can improvements in health increase a country's total income?

A doctor pursuing his own interests rather than the interests of his patients is an example of the principal-agent problem.

One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no information problems.

Over the past 160 years in the United States,life expectancy

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 5: The Economics of Health Care

What is moral hazard?

Under the Small Business Health Options Program (SHOP)provision of the health care plan,a small firm's employees would be pooled with the employees of other small firms.When an insurance plan covers a large number of people,

All of the following are part of the "regulation of health insurance" provision of the Patient Protection and Affordable Care Act (PPACA)except

Which of the following is not an advantage of risk pooling?

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

If a state requires all drivers to purchase auto insurance,insurance companies still face the problem of

What is an externality? Explain how someone receiving a meningitis vaccination is an example of an externality in the market for health care.

Changes in the health of the average person are an important indicator of changes in the standard of living.

In the principal-agent relationship,the agent is

Suggest three ways by which health insurance companies can reduce adverse selection?

How do current tax laws in the United States favor employer-based health care insurance?

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor's office,

Compared to other high-income countries,health care spending per person in the United States has been

On average,people in high-income countries ________ than people in low-income countries.

Some economists and policymakers who are in favor of government-provided health care believe that providing health care will generate

How can improvements in health increase a country's total income?

A doctor pursuing his own interests rather than the interests of his patients is an example of the principal-agent problem.

One effect of adverse selection in a market is that the equilibrium quantity of the product may be smaller than it would have been if there were no information problems.

Over the past 160 years in the United States,life expectancy

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters