HCM-4040 Health Care Econ chapters 1-6 quiz review

What are two categories of goods and services relationship to price?

(A) complements and (B) substitutions

The elements that influence demand in a market are?

1. income, 2. prices of other (related) goods and services 3. tastes 4. expectations

If the price of a physician visit is $75, and individual A purchases 10 visits, individual B purchases 12 visits, individual C purchases 14 visits, and individual D purchases 0 visits, what is the market demand for physician visits?

36 visits 10+12+14=36

Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate price elasticity of demand? A. -1.1 B. .-1.4 C. -3.7 D. -0.9

A. -1.1 Measuring quantity response to $ change. Ep=((Q2 - Q1) / (Q2 + Q1)) / ((P2 - P1) / (P2+P1)) Ep=((110-120)/(110+120))/((32.50-30)/(32.5+30)) Ep= 1.09

Total costs divided by total output is a measure of?

Average Cost

The change in total utility resulting from a unit change in the consumption of a good or services is called? A. Absolute utility B. Marginal utility C. Quality adjusted utility D. None of the above are correct

B. Marginal utility

When considering influences on demand, measures of income include which of these items? A. An individual's earnings in a specific time period B. An individual's level of wealth C. An individual's after-tax income D. Answers a and c only E. Answers a, b, and c are all correct

E. Answers a, b, and c are all correct

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

Economies of scope

True or False. Agency theory suggests that consumers are knowledgeable about their health and the possible treatments available and do not have to rely on physicians to provide guidance on health care treatment decisions.

False

True or False. Average fixed cost increases with increases in volume?

False

True or False. For a normal good or service, there is an indirect relationship between price and quantity.

False

True or False. Generally, markups, charge-to-cost ratios, for ancillary services were found to be lower than basic room charges in hospitals.

False

True or False. In general, any factor that causes the MC curve to shift upward will amount to a rightward shift in the supply schedule of a firm.

False

True or False. Price is irrelevant to the demand for many healthcare services.

False

True or False. Price is the only determinant of demand in a market.

False

True or False. The employer's share of a health insurance premium is a free benefit to the employee and is not a form of compensation from the employer to the employee.

False

True or False. The only factor influencing market demand is a change in the number of participants in the market.

False

True or False. Variable costs decrease as output increases?

False

The joining together of providers and sometimes consumers, of the same type is what form of integration.

Horizontal integration

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

Normal profit

If the case mix of patients seen by a physician increases in severity, then the production relationship would?

Shift downward

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

The marginal product

True or False. A complementary good or service is one whose use is generally accompanied by the use of the good or service in question.

True

True or False. A hospital's medical staff is a self-governing organization that typically has the responsibility for performing peer-review activities.

True

True or False. A shift in the demand curve is called an increase in demand, as opposed to a change in quantity demanded with a change in price.

True

True or False. According to your text, in general, there is a limit to how much good medical care can do. As more medical care is provided to the same person, each unit of medical care added provides slightly less benefit to the patient than did the prior one.

True

True or False. Because non-cash benefits such as health insurance are not subject to income tax they are cheaper for the employee and therefore preferred.

True

True or False. Opportunity cost reflects the value of the next highest-valued use that must be foregone when resources are used to undertake the selected activity.

True

True or False. Present taxation arrangements make health insurance cheaper to employees and encourages more of it to be bought. (pg. 29)

True

True or False. Price elasticity of demand is designed to measure the responsiveness of demand to a price change at a given point or between two given points on a single demand curve.

True

True or False. Purchasing insurance is a way for consumers to avoid risk of unexpected monetary losses from illnesses.

True

True or False. The profit-maximizing point for suppliers in a competitive market is where MR = MC.

True

True or False. The total cost curve is the vertical sum of the two curves total variable cost and total fixed cost.

True

True or False. To a provider, cost means the value of inputs used in the production process.

True

True or False. When considering uncertainty and the demand for health care services, a consumer cannot be certain whether or not a health care problem will occur.

True

The amalgamation of purchasers and sellers, such as insurers and providers joining to form an HMO is what form of integration.

Vertical integration

What is the profit maximizing level of output?

When marginal cost (MC) = marginal revenue (MR) MC=MR

The following factors will cause a movement along a given supply curve: a. Price b. Technology c. Government Subsidies d. Both b and c

a. Price

The critical price below which the firm will shut down depends on which costs of the firm? a. Variable costs b. Fixed costs c. Indirect costs d. Marketing costs

a. Variable costs

If the number of suppliers in the market increases, the supply curve will: a. Shift inward b. Remain stationary c. Shift Outward d. Move upward

c. Shift Outward

Describe a perfectly inelastic demand curve a. Flat from left to right at a given quantity b. Flat from left to right at a given price c. Vertical at a given quantity - like a capital "I" d.Following a perfect 45 degreee upward slope from left to right where a one unit increase in price = a one unit increase in quantity demanded

c. Vertical at a given quantity - like a capital "I"

In the "generic" healthcare market described on pg. 27 of the text, which of the following transactions is NOT included: a. Out-of-pocket payments from consumers to providers b. Premiums from consumers to insurers c. Reimbursement from insurers to providers d. Malpractice payments from the courts to consumers

d. Malpractice payments from the courts to consumers

Costs that change with changes in quantity of output produced are: a. Fixed costs b. Average costs c. Direct costs d. Variable costs

d. Variable costs