Deck 1: Usmedical Care: A System in Transition

Question 1

Which of the following is not a characteristic that makes medical care different from other commodities?

A)Demand for medical care is irregular.
B)Sellers have more information than buyers.
C)Third-party payers abound.
D)For-profit providers play a major role in delivering medical care.
E)The transaction itself if filled with uncertainty.

Answer 1

For-profit providers play a major role in delivering medical care.

Question 2

According to economic theory what is the optimal percentage of GDP to be spent on medical care?

A)6 percent.
B)8 percent.
C)10 percent.
D)12 percent.
E)There is no widely-accepted way to determine the optimal percentage.

Answer 2

There is no widely-accepted way to determine the optimal percentage.

Question 3

Self insurance refers to the practice of setting aside funds to pay for medical care expenses instead of paying premiums to an insurance company.Approximately, _______ of all employees who participate in group insurance plans work for firms that self-insure.

A)one-fourth
B)one-third
C)one-half
D)two-thirds
E)three-fourths

Answer 3

one-half

Question 4

The opportunity cost of investing in a new lithotripter (a machine that pulverizes kidney stones with sound waves) is

A)defined by the dollar cost of the equipment.
B)the same for every health care provider.
C)measured by the difference between the expected revenues from selling the services of the lithotripter and the invoice cost of the machine.
D)defined by the next best use of the money invested in the equipment.
E)impossible to calculate.

Question 5

Charging higher prices for one category of patients in order to provide free or subsidized care to another group is called

A)price discrimination.
B)cost-shifting.
C)categorical costing.
D)reprehensible and unethical.
E)creative accounting.

Question 6

Economists use the term "marginal" to describe costs and benefits

A)that are minimal and hardly worth noting.
B)that are incremental and thus relevant to decision making.
C)that are noteworthy but not the most important.
D)whose importance can be minimized through hard work.
E)none of the above.

Question 7

The 1974 federal legislation that exempted employers from certain state laws governing health insurance was

A)COBRA
B)ERISA
C)CON
D)HIPAA
E)SCHIP

Question 8

The "invisible hand" using Adam Smith's terminology refers to

A)government control of the market.
B)market forces working through the price mechanism.
C)the money supply that serves to keep the economy working smoothly.
D)the role of innovation in maintaining a steady rate of growth.
E)"behind-the-scenes" policy making to influence how markets allocate scarce resources.

Question 9

According to recent public opinion polls, what percentage of Americans are satisfied with the quality of the medical care they receive?

A)15 percent.
B)40 percent.
C)65 percent.
D)75 percent.
E)90 percent.

Question 10

What phrase best describes medical care spending in the United States in 1998?

A)Total spending of more than $2 trillion represents 17 percent of GDP and approximately $8,000 per capita.
B)Total spending of more than $1 trillion represents 14.8 percent of GDP and almost $6,000 per capita.
C)Total spending of less than $1 trillion represents less than 13 percent of GDP and almost $3,000 per capita.
D)Total spending is rising at double-digit rates and spending is soaring to over $5,000 per capita.
E)Total spending is under control and represents a shrinking percentage of GDP.