Deck 9: The Health Care Market

Question 1

What percentage of African Americans are uninsured?

A) 80
B) 3
C) 37
D) 21

Answer 1

21

Question 2

In the figure below,the value of insurance is $7,000.

A) True
B) False
C) Uncertain

Answer 2

False

Question 3

At any given time in the U.S.,16 percent of the population lacks health insurance.

A) True
B) False
C) Uncertain

Answer 3

True

Question 4

In 2013,the percentage of health care expenditures paid out-of-pocket was

A) 6.9.
B) 8.3.
C) 12.
D) 1.5.

Question 5

Which one of these conditions is not a part of asymmetric information?

A) parties are engaged in and economic transaction.
B) information is not uniform.
C) the government usually intercedes to fix the problem.
D) all of these answer options are correct.

Question 6

A third-party payment is

A) made by three people.
B) a payment that requires three signatures.
C) is made by someone other than the consumer.
D) is not used in the U.S.health system.

Question 7

When people behave in ways that involve increased risk because they have insurance,this is known as

A) adverse selection.
B) moral hazard.
C) asymmetric information.
D) a HMO.

Question 8

The U.S.is the leader in health care.

A) True
B) False
C) Uncertain

Question 9

Health care costs have been increasing dramatically in the U.S.

A) True
B) False
C) Uncertain

Question 10

Paying money in order to guarantee a certain level of compensation should an adverse event occur is

A) risk aversion.
B) risk smoothing.
C) risk pooling.
D) risk rating.

Question 11

Expected values

A) are calculated as the average value.
B) are calculated over all possible outcomes.
C) are weighted by the probability of an even occurring.
D) all of these answer options are correct.

Question 12

Marginal benefit and marginal cost must _______ to avoid a deadweight loss.

A) equal
B) never equal
C) decrease at an increasing rate
D) increase at an increasing rate

Question 13

People will take better care of their health if there is more health care available.

A) True
B) False
C) Uncertain

Question 14

Which country had the highest per capita expenditures on health care in 2009?

A) Australia
B) Japan
C) Norway
D) United States

Question 15

In the figure below,$40,000 for certain is as desirable as $47,000 with risk.

A) True
B) False
C) Uncertain

Question 16

Pooling individuals allow insurance companies to _______ risk from a societal point of view.

A) increase
B) decrease
C) do nothing regarding
D) none of these answer options are correct.

Question 17

When the average buyer of an insurance policy is likely to have higher risk than others in his class,this is known as

A) adverse selection.
B) moral hazard.
C) asymmetric information.
D) an HMO.

Question 18

The current percentage of Americans over the age of 65 is

A) 18.2%.
B) 19.0%.
C) 13.0%.
D) 10.5%.

Question 19

Health care markets may be inefficient because of

A) poor information.
B) adverse selection.
C) moral hazard.
D) all of these answer options are correct.

Question 20

The government can address __________ by providing universal health insurance coverage and charging uniform premiums.

A) expected utility
B) asymmetric information
C) commodity egalitarianism
D) adverse selection

Question 21

Suppose that the demand for medical services can be characterized by the equation X = 500 - P/3.Suppose further that the supply of health services can be characterized by the equation X = P - 100.
(a)What is the equilibrium quantity and price in the market for health services?
(b)In an effort to make health services more affordable,the government restricts the price of health services to be no greater than $250.What will happen to the quantity of health services in the market?

Question 22

Suppose that the quantity demanded of visits to a doctor per year is given by X = 12 - 0.05P,where X is the number of visits and P is the price the patient pays for a visit.
(a)How many visits would the patient make if he or she had to pay the full price of a visit,$100?
(b)How many visits would a patient make if he or she was insured and had to pay only a 15% co-insurance payment per visit?
(c)How many visits would the patient make if medical services were free?

Question 23

We have read that the uninsured and the insured behave differently in regard to medical services.Suppose that the insured have a demand curve that can be written as Q = 100 - P,where Q is the quantity of medical services and P is the price.Suppose further that the uninsured have a demand curve that can be written as Q = 100 - 2P.
(a)At a price of $10 of medical services,how much will each demand?
(b)At a quantity of 50 units,how much will the price be for the insured and uninsured?

Question 24

In Table 9.2,Emily will lose no income if she becomes sick.

A) True
B) False
C) Uncertain

Question 25

We have read in this chapter that people with insurance may be more likely to engage in risky behavior because they are insured.Does it make sense then that there should be an "insurance tax" on people that engage in these types of activities?

Question 26

A co-payment and coinsurance are the same thing.

A) True
B) False
C) Uncertain

Question 27

President Obama has suggested some form or universal health coverage for all Americans.How do you feel about this?

Question 28

Suppose that the demand for medical services can be characterized by the equation P = 100 - Q.Suppose further that the supply of health services can be characterized by the equation P = Q + 50.
(a)What is the equilibrium quantity and price in the market for health services?
(b)In an effort to make health services more affordable,the government restricts the price of health services to be no greater than $65.What will happen to the quantity of health services in the market?

Question 29

One reason for the recent increases in health care costs is the aging of the American population.

A) True
B) False
C) Uncertain

Question 30

Suppose there are two drivers,Jermaine and Janet.Jermaine is not a very safe driver.In fact,there is a 7.5% chance that he will have an accident within the next year.Janet is a relatively safe driver.Her chances of having an accident in the next year are only 1%.If Jermaine is involved in an accident,he will cost the insurance company $1,000,000.If Janet is involved in an accident,she will only cost the company $500,000.What is the expected pay-out that the company can expect from insuring these two?

Question 31

Suppose that the demand curve D_m for medical services can be characterized by the equation M = 2000 - P,where M is the amount of medical services received per year and P is the price.Suppose further that P₀ is constant at 800.
(a)Find the equilibrium quantity of services at P₀.
(b)Find the equilibrium quantity of services when there is only a co-payment of 20% required such that the price is 0.2P₀.
(c)How much additional expenditures induced by insurance are created?

Question 32

Since nearly a third of all people between the ages of 18 and 24 are uninsured,does it make sense to impose a surcharge for medical services to this cohort?