Deck 18: Health Insurance and Health Care

Question 1

On a global perspective,total expenditures on health care are:

A)greater in the United States than in Asia,but less than in Europe.
B)greater in the United States than in Europe,but less than in Africa.
C)greater in the United States than other countries in North America and Asia,but less than in Europe.
D)greater in the United States than in other countries in North America and Europe,but less than in Asia.
E)greater in the United States than every other individual country in the world.

Answer 1

E

Question 2

One of the central questions that society must answer regarding medical care is:

A)What is the optimal mix of medical care expenses?
B)Should funding be increased?
C)Should funding be tied to medical results?
D)To what extent should funding be decreased?
E)Should health insurance companies be abolished?

Answer 2

A

Question 3

Health care represents approximately ____________ of the gross domestic product (GDP)of the United States.

A)10%
B)17%
C)25%
D)33%
E)50%

Answer 3

B

Question 4

Use the accompanying graph to answer the questions that follow.

Which point on the graph best represents a country that has no healthcare infrastructure and where a small investment in health care would initially deliver significant health gains?

A)Point A
B)Point B
C)Point C
D)Point D
E)Point E

Question 5

What is one cited reason why healthcare expenditures are so high in the United States?

A)The uninsured often delay care,but preventive treatment would have been less expensive.
B)Medicare and Medicaid reduce the supply of medical care.
C)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
D)Insurance companies attempt to control medical care costs by capping expenditures.
E)Patients covered by insurance consume too little health care.

Question 6

On a global perspective,per capita expenditures on health care are greater in the United States than:

A)every other individual country in the world.
B)in Asia,but less than in Europe.
C)in Europe,but less than in Africa.
D)other countries in North America and Asia,but less than in Europe.
E)in other countries in North America and Europe,but less than in Asia.

Question 7

What is one cited reason why healthcare expenditures are so high in the United States?

A)Medicare and Medicaid reduce the supply of medical care.
B)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
C)Insurance companies attempt to control medical care costs by capping expenditures.
D)The uninsured often seek care from emergency rooms,where medical care is more expensive.
E)Patients covered by insurance consume too little health care.

Question 8

What is the result of a great deal of spending by patients,insurance companies,and the government on medical care in the United States?

A)The benefits to medical care increase at a decreasing rate.
B)The marginal benefits to medical care initially increase at an increasing rate but then increase at a decreasing rate.
C)The marginal benefits to medical care increase at an increasing rate.
D)The marginal benefit to medical care decreases at an increasing rate.
E)The marginal benefit to medical care is constant.

Question 9

What is one cited reason why healthcare expenditures are so high in the United States?

A)Medicare and Medicaid reduce the supply of medical care.
B)Patients covered by insurance consume too much medical care.
C)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
D)Insurance companies attempt to control medical care costs by capping expenditures.
E)Patients covered by insurance consume too little health care.

Question 10

One of the central questions that society must answer regarding medical care is:

A)Should funding be increased?
B)Should funding be tied to medical results?
C)Should funding be reallocated away from end-of-life care and applied toward prevention and medical research.
D)To what extent should funding be decreased?
E)Should health insurance companies be abolished?

Question 11

What makes the healthcare market different from other markets?

A)The consumers and producers in the healthcare market interact with one another more frequently in terms of prices and the amount to pay compared to other markets.
B)The consumers and producers in the healthcare market rarely interact with one another in terms of prices and the amount to pay compared to other markets.
C)Producers in the healthcare market are encouraged to under-produce.
D)Consumers in the healthcare market are encouraged to under-consume.
E)Consumers in the healthcare market are encouraged to under-produce.

Question 12

On an annual basis,healthcare expenditures in the United States are approximately:

A)$100 billion.
B)$500 billion.
C)$750 billion.
D)$1 trillion.
E)$2 trillion.

Question 13

The largest component of personal healthcare expenditures in the United States is:

A)nursing home care.
B)hospital care.
C)prescription drugs.
D)home health care.
E)physician and clinical services.

Question 14

The __________ is the primary intermediary between consumers and producers in the healthcare market.

A)employer
B)insurance company
C)hospital
D)pharmacy
E)doctor

Question 15

What is a central healthcare question that society must find an answer for?

A)Should health care insurance companies be involved in the healthcare market?
B)Is the marginal benefit of spending more on prevention greater or less than the marginal benefit of spending on the extension of life?
C)Should the government be involved in the healthcare market?
D)Should people be required to seek preventive care?
E)Should medical care in the emergency room be delivered only to those who can pay for it?

Question 16

Use the accompanying graph to answer the questions that follow.

Which point on the graph best represents the United States,where a great deal of health care is delivered but there are few additional health gains?

A)Point A
B)Point B
C)Point C
D)Point D
E)Point E

Question 17

What is one cited reason why healthcare expenditures are so high in the United States?

A)Medicare and Medicaid reduce the supply of medical care.
B)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
C)Government-sponsored forms of health insurance increase the demand for medical care by the elderly and the poor.
D)Insurance companies attempt to control medical care costs by capping expenditures.
E)Patients covered by insurance consume too little health care.

Question 18

What is one cited reason why healthcare expenditures are so high in the United States?

A)Medicare and Medicaid reduce the supply of medical care.
B)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
C)Insurance companies attempt to control medical care costs by capping expenditures.
D)Patients covered by insurance consume too little health care.
E)Doctors know patients are likely covered by insurance and increase the supply of medical care.

Question 19

What is one cited reason why healthcare expenditures are so high in the United States?

A)Medicare and Medicaid reduce the supply of medical care.
B)Doctors know patients are likely covered by insurance,which reduces the demand for medical care.
C)People engage in unhealthy habits.
D)Insurance companies attempt to control medical care costs by capping expenditures.
E)Patients covered by insurance consume too little health care.

Question 20

What is the result of a great deal of spending by patients,insurance companies,and the government on medical care in the United States?

A)The benefits to medical care decrease at a decreasing rate.
B)The marginal benefits to medical care increase at an increasing rate.
C)The marginal benefit to medical care decreases at an increasing rate.
D)The marginal benefit of medical care is closer to zero than it would be if much less were spent on medical care.
E)The marginal benefit to medical care is constant.

Question 21

Which of the following is a negative consequence to having insurance companies exist in a society?

A)The asymmetric problem is reduced by insuring large groups of people.
B)They are able to pool risks and give the sick the same access to medical care as the healthy.
C)When they have insurance,individuals will consume more medical care than if they have to pay the full cost for care.
D)When they have insurance,individuals will consume less medical care than if they have to pay the full cost for care.
E)By insuring large groups of people,the asymmetric problem is increased.

Question 22

The adverse selection problem and the principal-agent problem are examples of:

A)diminishing returns.
B)asymmetric information.
C)moral hazard.
D)third-party participation.
E)market failures.

Question 23

After winning the lottery,I have decided to move from my apartment to a mansion.I have hired a professional company to move my belongings.What type of problem should I be most concerned about?

A)diminishing returns
B)adverse selection
C)principal-agent problem
D)symmetric information
E)an adverse selection problem that became a principal-agent problem

Question 24

What would happen if insurance companies offered to pay for patients to receive a second opinion before a medical procedure?

A)The principal-agent problem would become less severe.
B)The adverse selection problem would become more severe.
C)The moral hazard problem would become more severe.
D)The adverse selection problem would become less severe.
E)The moral hazard problem would become less severe.

Question 25

Insurance companies that sell insurance to individuals are able to minimize the severity of the adverse selection problem by:

A)guaranteeing that all applicants receive coverage.
B)requiring a medical exam.
C)limiting the amounts that doctors are paid.
D)requiring patients to use a health maintenance organization (HMO).
E)expediting payment of benefits.

Question 26

__________ exist(s)whenever one party has more information than the other party.

A)Moral hazard
B)Immoral hazard
C)Asymmetric information
D)Symmetric information
E)Diminishing returns

Question 27

The passage in 1996 of the Health Insurance Portability and Accountability Act had which of the following consequences on costs?

A)They rose for employer-provided health insurance because the adverse selection problem became more severe.
B)They fell for employer-provided health insurance because the moral hazard problem became more severe.
C)They rose for employer-provided health insurance because the principal-agent problem became more severe.
D)They fell for employer-provided health insurance because the principal-agent problem became less severe.
E)They rose for employer-provided health insurance because the moral hazard problem became less severe.

Question 28

What would be the consequence for patients of a law that limited the amount of annual profit a health insurance company could earn?

A)The principal-agent problem would become less severe.
B)The adverse selection problem would become more severe.
C)The moral hazard problem would become more severe.
D)The adverse selection problem would become less severe.
E)The moral hazard problem would become less severe.

Question 29

What would happen if,as a business owner,I forced my employees to join an HMO?

A)Medical care costs would likely be higher than if my employees could see any doctor and receive any test they wanted because unnecessary care would be fully covered.
B)Medical care costs would likely be lower than if my employees could see any doctor and receive any test they wanted because the amount of unnecessary care would be reduced.
C)Medical care costs would likely be unaffected by whether employees join an HMO or not.
D)Medical care costs would likely be lower because the less healthy would be encouraged to receive care.
E)Medical care costs would likely be lower because the healthy would be discouraged from receiving care.

Question 30

What form does the adverse selection problem take in the healthcare market?

A)Buyers can buy as much health care as they want.
B)Sellers can sell as much health care as they want.
C)Buyers and sellers face delays when interacting.
D)Sellers are less likely to provide care because they know it is expensive.
E)Buyers that are less healthy are more likely to seek insurance because they anticipate needing medical care.

Question 31

After many horrendous first dates arranged through a dating website where I provided minimal information,I have decided to ask my good friends,who know all about me,help me find a companion.By relying on my friends,I am trying to reduce a(n):

A)moral hazard problem that became a principal-agent problem.
B)principal-agent problem that became an adverse selection problem.
C)principal-agent problem.
D)adverse selection problem.
E)moral hazard problem.

Question 32

A doctor may order more tests than necessary for a patient.This reflects which of the following problems?

A)symmetric information
B)diminishing returns
C)adverse selection
D)principal-agent problem
E)market failure

Question 33

How can an insurance company reduce the adverse selection problem?

A)The adverse selection problem can't be reduced.
B)An easy insurance application process could be used,unhealthy individuals could be refused coverage,and large groups of individuals could be insured.
C)An extensive insurance application process could be used,unhealthy individuals could be refused coverage,and only individuals would be insured.
D)An extensive insurance application process could be used,hardly anyone would be refused coverage,and large groups of individuals could be insured.
E)An extensive insurance application process could be used,unhealthy individuals would be refused coverage,and large groups of individuals could be insured.

Question 34

Instead of changing the oil in my car by myself,I take my car to a 10-minute oil change store.Although it's fast and inexpensive,what type of problem might I encounter?

A)diminishing returns
B)adverse selection
C)principal-agent problem
D)symmetric information
E)an adverse selection problem that became a principal-agent problem

Question 35

A key component in the Affordable Care Act passed in the United States is the requirement that individuals must either obtain basic medical insurance coverage or pay a tax.Which of the following problems was this mandate designed to reduce?

A)moral hazard
B)adverse selection
C)diminishing returns
D)market failure
E)principal-agent problem

Question 36

The Medicare and Medicaid programs represent __________ of medical spending in the United States.

A)5%
B)12%
C)24%
D)33%
E)51%

Question 37

A distortion in the healthcare market can occur when:

A)health insurance companies require individuals to have a primary care doctor.
B)doctors are rewarded for reducing a patient's recovery time after surgery.
C)the involvement of health maintenance organizations discourages efficiency in healthcare expenditures.
D)the existence of healthcare insurance encourages customers to seek more health care than they otherwise would.
E)when there is a lack of restrictions for entry into the market for delivering health care.

Question 38

What can an insurance company do to reduce the principal-agent problem?

A)Give patients access to medical records,require doctors to justify tests,and pass reforms to medical malpractice laws.
B)Give patients only limited access to medical records,force doctors to justify tests,and pass reforms to medical malpractice laws.
C)Give patients access to medical records,allow doctors to determine which medical tests are appropriate,and pass reforms to medical malpractice laws.
D)Give patients access to medical records,require doctors to justify tests,and repeal medical malpractice laws.
E)There is no way to reduce the principal-agent problem.

Question 39

The problem that arises when an agent does not complete a task in the way intended by the principal is:

A)the principal-agent problem.
B)immoral hazard.
C)diminishing returns.
D)adverse selection.
E)market failure.

Question 40

__________ exist(s)whenever one party has access to some aspect of product quality that the other party does not have.

A)Adverse selection
B)Immoral hazard
C)Moral hazard
D)Diminishing returns
E)Symmetric information

Question 41

My mother has always said,"If you want something done right,you have to do it yourself." What type of asymmetric information problem does her statement reflect?

A)diminishing returns
B)adverse selection
C)moral hazard
D)principal-agent problem
E)an adverse selection problem that became a principal-agent problem

Question 42

Instead of referring to a sample of comments a doctor has provided on her own website,I have decided instead to rely on reviews from friends who have been her patients.What type of asymmetric information problem am I trying to correct by soliciting comments from friends?

A)diminishing returns
B)adverse selection
C)moral hazard
D)principal-agent problem
E)an adverse selection problem that became a principal-agent problem

Question 43

__________ would be minimized if hospital policy based a physician's salary on how healthy patients were following treatment by that doctor rather than the number of patients treated per year.

A)Moral hazard
B)Adverse selection
C)Diminishing returns
D)Market failure
E)The principal-agent problem

Question 44

One method of reducing the moral hazard problem in healthcare insurance would be to allow insurance companies to:

A)increase the cost for coverage.
B)agree to cover preventive care completely.
C)increase the number of doctors eligible for payment.
D)limit the number of new customers.
E)require a medical exam before offering coverage.

Question 45

After I received health insurance from my job as an accountant,I decided to become a skydiver on the weekends because I knew my health insurance from my employer would cover most of my medical costs if I were injured.Which of the following statements is true?

A)The moral hazard problem increased in intensity.
B)The moral hazard problem decreased in intensity.
C)The principal-agent problem became more severe.
D)The principal-agent problem became less severe.
E)The adverse selection problem became more severe.

Question 46

After attending medical school,I have decided to encourage all of my family members to see me for their healthcare needs because I know their health problems and I have an incentive to keep them alive and as healthy as possible.What type of asymmetric information problem am I trying to correct by having my family members see me for care?

A)principal-agent problem
B)diminishing returns
C)adverse selection
D)moral hazard
E)an adverse selection problem that became a principal-agent problem

Question 47

After a natural disaster destroyed one of the ten hospitals in a city and injured nearly 75% of the population,what would you expect to happen to the price and quantity of medical services,ceteris paribus?

A)There would be no expected changes to equilibrium price or quantity.
B)Equilibrium price would rise because supply would slightly decrease and demand would dramatically increase.
C)Equilibrium price would fall because supply would slightly decrease and demand would dramatically increase.
D)Equilibrium price would rise and quantity would unambiguously fall because supply would slightly decrease and demand would dramatically increase.
E)Equilibrium price would fall and quantity would unambiguously rise because demand would decrease and supply would remain constant.

Question 48

I have a tendency to get very bored while I am driving my car and fall asleep behind the wheel.I have decided to seek the maximum amount of car insurance I can obtain.What does this situation reflect?

A)the problem of diminishing returns
B)the problem of adverse selection
C)the principal-agent problem
D)the problem of moral hazard
E)an adverse selection problem that became a principal-agent problem

Question 49

How can an insurance company reduce the moral hazard problem?

A)Impose a co-insurance where patients pay for a percentage of their medical care expenses,pay none of the medical expenses associated with preventive care,and raise deductibles.
B)Impose a co-insurance where patients pay for a percentage of their medical care expenses,pay all of the medical expenses associated with preventive care,and raise deductibles.
C)Eliminate patients' responsibility to pay for a percentage of their medical care expenses,pay all of the medical expenses associated with preventive care,and raise deductibles.
D)Impose a co-insurance where patients pay for a percentage of their medical care expenses,pay all of the medical expenses associated with preventive care,and lower deductibles.
E)There is no way to reduce the moral hazard problem.

Question 50

One method of reducing the moral hazard problem in healthcare insurance would be:

A)for all insurance companies to increase the cost for coverage.
B)to allow insurance companies to agree to cover preventive care completely.
C)to allow insurance companies to impose payment limits on preventable conditions.
D)to allow insurance companies to limit the number of new customers.
E)to allow insurance companies to require a medical exam before offering coverage.

Question 51

After a natural disaster destroyed nine of the ten hospitals in a city but injured only 1% of the population,what would you expect to happen to the price and quantity of medical services?

A)There would be no expected changes to equilibrium price or quantity.
B)Equilibrium price and quantity would rise because supply would slightly decrease and demand would dramatically increase.
C)Equilibrium price and quantity would fall because supply would slightly decrease and demand would dramatically increase.
D)Equilibrium price would rise and quantity would fall because supply would significantly increase and demand would increase only slightly.
E)Equilibrium price would fall and quantity would rise because demand would decrease and supply would remain constant.

Question 52

As the largest employer in a small town,I may be more likely to take business risks because,if the company struggles,I might expect the local government to provide financial assistance.This situation reflects which of the following?

A)a moral hazard problem that becomes an adverse selection problem
B)a principal-agent problem that becomes a moral hazard problem
C)a principal-agent problem
D)a moral hazard problem
E)an adverse selection problem

Question 53

As the owner of a business that sells alarm clocks,I want to hire workers who will sell as many of these clocks as possible.If I perceive the moral hazard to be strong among my sales employees,what could I do to minimize it?

A)I could offer a significant signing bonus.
B)I could offer a constant hourly wage.
C)I could offer a constant yearly salary.
D)I could pay employees a percentage of their sales.
E)I could conduct a lengthy interview process.

Question 54

What would be the consequence of a law that forced individuals to receive an annual preventive health checkup?

A)The adverse selection problem would become more intense.
B)The moral hazard problem would become more intense.
C)The adverse selection problem would become less intense.
D)The moral hazard problem would become less intense.
E)Both the moral hazard and adverse selection problems would become less intense.

Question 55

Requiring patients to pay a portion of the cost of the medical care they receive is designed to reduce the severity of:

A)moral hazard.
B)diminishing returns.
C)adverse selection.
D)the principal-agent problem.
E)market failure.

Question 56

What would be the consequence of a law that forced patients to pay all of the costs for preventive care?

A)The adverse selection problem would become more intense.
B)The moral hazard problem would become more intense.
C)The adverse selection problem would become less intense.
D)The moral hazard problem would become less intense.
E)Both the moral hazard and adverse selection problems would become more intense.

Question 57

High-deductible,low-premium health insurance plan Which employer-provided and employer-subsidized health insurance plan would you choose if you want to keep your healthcare insurance subsidy as low as possible?

A)health care plan 1 because most costs are covered by the employee and the employee is encouraged to visit the doctor only when it is necessary
B)health care plan 2 because most costs are covered by the employee and the employee is encouraged to visit the doctor only when it is necessary
C)health care plan 1 because this plan encourages healthy employees to get coverage and lowers the overall premium paid for by all employees
D)health care plan 2 because employees are encouraged to visit the doctor for all possible problems
E)either one because there should be no noticeable difference in overall healthcare costs associated with either health insurance plan

Question 58

The problem that arises when a party that is protected from risk behaves differently than if it were not protected from risk is:

A)moral hazard.
B)diminishing returns.
C)the principal-agent problem.
D)adverse selection.
E)market failure.

Question 59

What would be the consequence for patients of allowing insurance companies to earn as much as they want?

A)The principal-agent problem would become less severe.
B)The adverse selection problem would become more severe.
C)The moral hazard problem would become more severe.
D)The adverse selection problem would become less severe.
E)The moral hazard problem would become less severe.

Question 60

High-deductible,low-premium health insurance plan Which plan would you choose if you are concerned that doctors may order too many tests?

A)health care plan 1 because patients will first make sure that all tests are necessary when they must pay a substantial portion of the costs
B)health care plan 2 because patients will first make sure that all tests are necessary when they must pay a substantial portion of the costs
C)health care plan 2 because the insurance company will discourage doctors from ordering too many tests
D)health care plan 2 because the threat of malpractice lawsuits will discourage doctors from ordering too many tests
E)neither one because they would not deal effectively with the problem

Question 61

Which of the following statements is true?

A)The demand for health care among unhealthy young adults is elastic.
B)The demand for health care among healthy young adults is inelastic.
C)The demand for health care among healthy older adults is elastic.
D)The demand for health care among unhealthy older adults is inelastic.
E)The degree of healthiness has no effect on the elasticity of demand for health care.

Question 62

How do demand and supply influence the increasing cost of health care?

A)Demand and supply have no influence over the price of health care.
B)Demand is limited and supply is strong and inelastic.
C)Demand and supply are both limited.
D)The demand for health care is strong and inelastic,whereas supply is limited.
E)The demand and supply for health care are both strong and inelastic.

Question 63

In a town with only one hospital,the largest employer (a local manufacturing plant)now offers health insurance to its employees.What would be the expected change to the price and quantity of medical services?

A)Equilibrium price and quantity would not be affected.
B)Equilibrium price and quantity would rise because supply and demand has decreased.
C)Equilibrium price and quantity would fall because supply has decreased but demand has increased.
D)Equilibrium price and quantity would rise because demand has increased but supply has remained constant.
E)Equilibrium price would fall and quantity would rise because demand has decreased and supply has remained constant.

Question 64

While throwing a Frisbee to my dog,I sprained my ankle.In regard to seeking medical care,which of the following statements is true?

A)My demand for care is more elastic than if I had a sprained ankle as well as a severe wound requiring stitches.
B)My demand for care is more inelastic than if I had a sprained ankle as well as a severe wound requiring stitches.
C)My demand for care is completely inelastic.
D)My demand for care is completely elastic.
E)My demand for care is highly,but not completely,inelastic.

Question 65

Patients in need of an organ transplant often require years of weekly treatments to keep them healthy until a compatible organ is found.Because such maintenance care may last for years,what can be said about the elasticity of treatment for these patients?

A)The demand for treatment is more elastic than would be the case for an ailment that required stitches in a single office visit because of the long time horizon.
B)The demand for treatment is more inelastic than would be the case for an ailment that required stitches in a single office visit because of the long time horizon.
C)The demand for treatment is neither elastic nor inelastic.
D)The demand for treatment is more elastic because of its necessity.
E)The demand for treatment is more inelastic due to the fact that the supply of treatment is limited.

Question 66

The federal government has recently decided to expand the amount of prescription drug insurance offered to the elderly.How does this affect the price and quantity of medical services?

A)Equilibrium price and quantity are not affected.
B)Equilibrium price and quantity have risen because supply and demand have decreased.
C)Equilibrium price and quantity have risen as demand has increased,but supply has remained constant.
D)Equilibrium price and quantity have fallen because demand has decreased and supply has held constant.
E)Equilibrium price has fallen and quantity has risen because demand has decreased and supply has held constant.

Question 67

Health insurance companies routinely hold patients partially responsible for medical costs.One decides to increase the amount that patients have to pay.Which of the accompanying graphs best represents this change?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)There would be no change in demand.

Question 68

Many colleges and universities in the United States now require students to purchase health insurance.What would be the consequence of such a requirement?

A)It would decrease the demand for health care.
B)It would increase the supply of health care.
C)It would decrease the supply of health care.
D)It would have no affect on the supply or demand for health care.
E)It would lower the overall price for healthcare insurance as healthy college students are added to the pool of insured.

Question 69

In an effort to reduce the federal budget deficit,Congress has decided to reduce the amount of money spent on Medicare and Medicaid.How does this affect the equilibrium price and quantity of medical services?

A)They are not affected.
B)They have risen as demand has increased,but supply has remained constant.
C)They have fallen because demand has decreased and supply has held constant.
D)They have risen because supply and demand have decreased.
E)Equilibrium price has fallen and quantity has risen because demand has decreased and supply has held constant.

Question 70

While throwing a Frisbee to my dog,I sprained my ankle.In regard to seeking medical care,which of the following statements is true?

A)My demand for care is completely inelastic.
B)My demand for care is completely elastic.
C)My demand for care is more inelastic than it would be for a broken leg.
D)My demand for care is more elastic than it would be for a broken leg.
E)My demand for care is highly,but not completely,inelastic.

Question 71

What would happen to the price and quantity of medical services if an existing doctor's office closed in a small town,ceteris paribus?

A)Equilibrium price and quantity would rise because both supply and demand increased.
B)Equilibrium price and quantity would fall because both supply and demand decreased.
C)Equilibrium price would rise and quantity would fall because supply decreased and demand was constant.
D)Equilibrium price and quantity would rise because demand decreased while supply was constant.
E)Equilibrium price and quantity would fall because demand decreased and supply was constant.

Question 72

As governor,you have decided that anyone who works but earns less than $20,000 a year will have their health insurance premiums paid for by the government.How does this affect the equilibrium price and quantity of medical services?

A)They are not affected.
B)They have risen and demand has increased,but supply has remained constant.
C)They have risen because supply and demand have decreased.
D)They have fallen because demand has decreased and supply has held constant.
E)Equilibrium price has fallen and quantity has risen because demand decreased and supply has remained constant.

Question 73

Which of the following statements is true?

A)The demand for health care among healthy young adults is elastic.
B)The demand for health care among healthy young adults is inelastic.
C)The demand for health care among unhealthy older adults is elastic.
D)The demand for health care among healthy older adults is inelastic.
E)The degree of healthiness has no effect on the elasticity of demand for health care.

Question 74

Which of the following represents an accurate statement?

A)As the price of medical care rises,the quantity supplied decreases.
B)As the price of medical care rises,the supply increases.
C)As the price of medical care rises,the demand increases.
D)As the price of medical care rises,the quantity demanded decreases.
E)As the price of medical care rises,the supply curve decreases.

Question 75

Favorable tax policies have encouraged the construction of new hospitals in the United States.How does this affect the equilibrium price and quantity for medical services?

A)They are not affected.
B)They have risen because supply and demand have decreased.
C)They have fallen because demand has decreased and supply has held constant.
D)Equilibrium price has fallen and quantity has risen as supply has increased,but demand has remained constant.
E)Equilibrium price has fallen and quantity has risen because demand has decreased and supply has held constant.

Question 76

As governor,you have decided to balance the budget by reducing the number of people for whom the government provides health care.How does this affect the equilibrium price and quantity of medical services?

A)They are not affected.
B)They have risen as demand has increased,but supply has remained constant.
C)They have risen because supply and demand have decreased.
D)They have fallen because demand has decreased and supply has held constant.
E)Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.

Question 77

After years of paying all healthcare expenses for employees,a city's largest employer has decided not to offer healthcare coverage anymore.What would be the effect on the equilibrium price and quantity for medical services in the city?

A)They would not be affected.
B)They would rise because supply and demand would decrease.
C)They would fall because demand would decrease and supply would be held constant.
D)They would rise as demand would increase,but supply would remain constant.
E)They would rise because demand would decrease and supply would remain constant.

Question 78

Which of the following medical procedures would have the most inelastic demand?

A)the removal of an appendix
B)plastic surgery
C)a heart transplant
D)a consultation about hair loss
E)immunization for the flu

Question 79

In terms of supply and demand for hip surgery conducted in a foreign country,which of the accompanying graphs represents the expansion of medical tourism as consumers become aware of the high quality of health care that can be found abroad?

A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question 80

What would happen to the price and quantity of medical services if a new doctor's office opened in a small town?

A)Equilibrium price and quantity would rise because both supply and demand would increase.
B)Equilibrium price and quantity would fall because both supply and demand would decrease.
C)Equilibrium price and quantity would rise because demand would decrease and supply would remain constant.
D)Equilibrium price would fall and quantity would rise because supply would increase and demand would remain constant.
E)Equilibrium price and quantity would fall because demand would decrease and supply would remain constant.