Question 1

In the demand model, the endogenous variable is:

Accepted Answer

In a demand model, the endogenous variable is typically the quantity demanded, which is directly influenced by the price of the good or service.

Question 2

Measures of ability to purchase healthcare services include:

Accepted Answer

An individual's earnings in a specific time period, level of wealth, and after-tax income are all measures of ability to purchase healthcare services.

Question 3

The change in total utility resulting from a unit change in the consumption of a good or services is called

Accepted Answer

Marginal utility refers to the additional satisfaction or utility gained from consuming one more unit of a good or service.

Question 4

If the price of a physician visit is $75, and individual A's own demand for visits is 10 visits, individual B's own demand for visits is 12 visits, individual A demands 4 visits for individual B, and individual C demands 2 visits for Individual A, what is the social demand for physician visits?

Accepted Answer

The social demand is the sum of all individual demands: A's own demand (10) + B's own demand (12) + A's demand for B (4) + C's demand for A (2) = 28 visits.

Question 5

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 arc price elasticity of demand?

Accepted Answer

The arc price elasticity of demand is calculated using the formula: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Substituting the given values: [(110 - 120) / ((110 + 120) / 2)] / [(32.50 - 30) / ((32.50 + 30) / 2)] = -1.1.

Question 6

A model is a complete description of reality.

Accepted Answer

A model is a simplified representation of reality, designed to capture essential features while ignoring less relevant details.

Question 7

The present value of a benefit of $10,000 that occurred in 4 years, discounted at a rate of 8% would be $6,800.

Accepted Answer

The present value is calculated using the formula PV = FV / (1 + r)^n. For $10,000 at 8% over 4 years, PV = $10,000 / (1.08)^4 = $7,350.

Question 8

An outward shift in demand is called an increase in demand.

Accepted Answer

An outward shift in demand indicates that at every price level, the quantity demanded has increased, which is termed as an increase in demand.

Question 9

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

Accepted Answer

Complementary goods are products that are typically consumed together, where the use of one increases the use of the other, like printers and ink cartridges.

Question 10

A horizontal demand curve reflects the condition that individuals will still demand and pay for the same quantity of healthcare services as prices increase.

Accepted Answer

A horizontal demand curve indicates perfectly elastic demand, meaning consumers will only buy at one price and any increase in price will result in zero quantity demanded.

Question 11

For a normal good, there is a direct relationship between price and quantity demanded.

Accepted Answer

For a normal good, there is an inverse relationship between price and quantity demanded, meaning as the price decreases, the quantity demanded increases, and vice versa.

Question 12

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.

Accepted Answer

Price elasticity of demand quantifies how much the quantity demanded of a good responds to changes in its price, either at a specific point or over a range on the demand curve.

Question 13

What are the two main roles that physicians have in the health care industry?

Accepted Answer

The answer of What are the two main roles that...

Question 14

Explain the difference between the slope of a demand curve and the elasticity of demand.

Accepted Answer

The answer of Explain the difference between the slope of...

Question 15

Currently, there is a $0.50 copayment on drugs. The HMO has decided to raise this to $1.00 per prescription. The cost of a prescription is $6.00, which means the HMO's contribution to the total cost will fall from $5.50 to $5.00. Currently, the arc elasticity of demand is about -0.5 for prescriptions, and the HMO members use 2.2 prescriptions per capitA) How much will be de?manded after the new copayment is put into effect, and how much money will this save the HMO?

Accepted Answer

The answer of Currently, there is a $0.50 copayment on...

Quiz 4: Demand for Health and Medical Care