HMGT 3320- Exam 2

T/F: Equilibrium is reached when quantity demanded equals the quantity supplied

True

If the marginal cost curve slopes upward steeply, an increase in physicians' fees will bring about

a small increase in physician supply

T/F: If total utility increases as wealth increases, the first derivative of the utility function is negative

false

A dynamic disequilibrium occurs when

the market has NOT had time to adjust to a change

Under the DRG system, assume a conversion rate of $525 per unit and a relative weight of 2.65, then a hospital would receive how much for a patient with this diagnosis

$1391.25

Assume each person in an insurance pool has a risk function as follows: there is a 25% probability of an $800 loss, a 50% probability of a $700 loss and a 25% probability of a $400 loss. What is the expected mean loss?

$650

If an individual has a 90% chance of having $10,000 in wealth and a 10% chance of having only $9,000 because of a payout for medical care, what is the expected value of wealth of the individual?

$9,900

Members of the management triangle include

Administrators, hospital trustees, and physicians (ALL OF THESE ANSWERS)

The greater the rate of decrease of marginal utility for an individual

The more risk averse the individual is in the more willing the individual is to pay premiums above the actuarially fair premium

T/F: A tax-exempt hospital will tend to provide care of a higher quality level

True

T/F: Charging different prices for the same product to different buyers is called price discrimination

True

T/F: If any of the initial conditions that influence demand change, there will be a new equilibrium price and a new equilibrium quantity in a competitive

True

T/F: If the government increases taxes, the producer would need to receive a higher price for each unit produced

True

T/F: In a competitive market, a single market-clearing price will emerge

True

T/F: Opportunity cost reflects the value of the next highest-value use that must be foregone when resources are used to undertake the selected activity

True

T/F: Technology is a way of transforming inputs into outputs.

True

T/F: The marginal rate of substitution reflects how much input A will need to be increased to offset a decrease in a unit of input B

True

T/F: The profit-maximizing point for suppliers in a competitive market is where MR=MC

True

T/F: The total cost curve is the vertical sum of the two curves total variable cost and total fixed cost.

True

T/F: Under a community rating, all consumers pay the same premium regardless of his or her actual experience

True

A factor that causes the marginal cost curve to shift upward will result in:

a decrease in supply

Product differentiation implies that each supplier then faces

a downward-sloping demand curve

In a monopolistic competition model, the fundamental conditions include:

each firm can vary its product quality

Essential ingredients of market power are

ease with which buyers and sellers can weigh alternatives

The savings derived from producing different products jointly/simultaneously in the same production unit is called

economies of scope

T/F: A principal-agent relationship exist when one entity or individual (call the principal) acts on behalf of another entity or individual (called the agent)

false

T/F: An implied condition of pooling risks with insurance is that the event being insured against is under the control of the individuals

false

T/F: In a monopolistic market, demanders have close substitutes for the good or service.

false

T/F: Information symmetry occurs when at least some relevant information for a transaction is known to some, but not all of the parties involved

false

T/F: The demand for long-term care reflects a derived demand rather than a basic demand

false

T/F: The use of the usual, customary and reasonable (URC) payment method has often been reviewed as anti-inflationary

false

T/F: the substitution effect reflects the change in the desired hours of work resulting from a change in income when the wage is held constant

false

The additional production yielded by the use of one extra unit of variable input is called

the marginal product

Under retrospective payment, the entity incurring all financial risk is

the payer

The actual quantity traded in a market refers to

the quantity utilized

T/F: A hospitals medical staff is a self-governing organization that typically has the responsibility for performing peer-review activities

true

T/F: As the magnitude of the possible loss increases, the amount of money the individual is willing to pay to avert the possible loss increases

true

T/F: Medicare Shared Savings program establishes financial incentives for Accountable Care Organization's to provide coordinated, well-managed care across all types of providers

true

T/F: The existence of an elasticity of demand for medical care in response to insurance is known as moral hazard

true

T/F: The object of competitive bidding is to have patients treated at the least cost to the public agency

true

T/F: Under capitation, the healthcare provider is placed at financial rich rest for all the members in his/her panel

true

The critical price below which the firm will shut down depends on which costs of the firm?

variable costs

The analysis of provider behavior involving capital additions has been referred to as

long-run analysis

A normal return on investment associated with the risk taken is called

normal profit

A method of paying hospitals that is based on an amount paid for each day a patient is hospitalized is

per diem payment

A change in the following factor will cause a movement along a given supply curve

price

If the number of suppliers in the market increases, the supply curve will

shift outward

Total costs divided by total output is a measure of

average costs

An insurance company has a payout of health benefits of $100,000. Administrative expenses on top of that are $30,000, and the profits are $10,000. The ratio of premiums to benefits is

1.4

If individual had wealth of $10,000 with a corresponding utility of 100.0, a 20% probability of becoming ill resulting in medical costs of $2,000, which lowers utility to 84.4, then the expected utility without insurance is

96.88

A type of situation that will result in changes in supply is?

A change in input combinations used to produce output by existing suppliers, an increase in the capital stock of existing suppliers, and entry into the market by new suppliers (ALL OF THESE)

T/F: A Critical Access Hospital is a full-service acute care hospital in a rural area

False

T/F: A market in economics is a set of arrangements that brings buyers and sellers together in a physical location

False

T/F: A shortage occurs when the quantity supplied exceeds the quantity demanded

False

T/F: For the supply of a normal good or service, there is an inverse relationship between price and quantity.

False

T/F: Generally, markups (charge-to-cost ratios) for ancillary services were found to be lower that basic room charge in hospitals

False

T/F: In general, a firm will stop production on the price no longer covers it's fixed cost

False

T/F: Only finished goods and services are considered to be outputs

False

T/F: Strictly speaking, the price of insurance is the pure or actuarily fair premium

False

T/F: The first known health insurance in the United States was implemented by the Granite Cutters Union

False

T/F: The production function gets flatter as total production decreases

False

T/F: Total fixed costs plotted on a graph is represented by an upward sloping line

False

T/F: When demand increases and supply decreases, price will decrease

False

The method of payment that is similar to a piece-rate method is

Fee-for-service