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