Health Economic Assignment 1
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Health Economic Assignment 1
1. If a hospital is experiencing economies of scale,
a. its average cost curve is positively sloped as output increases.
b. its average cost curve is negatively sloped as output increases.
c. it should reduce its output level to lower costs.
d. quality is falling as output is rising.
2. When a physician knows more about alternative treatments than her patients, we say that _______ exists.
a. rational ignorance.
b. asymmetric information.
c. moral hazard.
d. adverse selection.
3. Inoculation programs against certain diseases such as small pox, polio, and whooping cough create
a. public goods.
b. positive externalities in consumption.
c. nonrival goods.
d. nonexcludable goods.
4. Which of the following will not cause a shift in the medical care supply curve?
a. a change in the cost of medical school tuition.
b. a change in the percentage of the population with health insurance.
c. a change in the amount of student aid available to promising undergraduate students studying biology.
d. a change in the number of high-profile medical malpractice lawsuits brought against physicians increasing the premiums on malpractice insurance.
5. A shortage of hospital beds will likely lead to
a. an increase in the supply of hospital beds.
b. a decrease in the demand for hospital beds.
c. an increase in the price of a hospital stay.
d. a decrease in the price of a hospital stay.
6. Suppose the market for hospital outpatient treatment is in equilibrium when a price ceiling is set below the equilibrium price. What do you expect to happen?
a. A shortage will develop.
b. Quantity demanded will decrease.
c. The number of outpatient visits will rise.
d. The demand for outpatient procedures will fall.
7.Suppose the demand curve for medical care services is perfectly inelastic. What will happen to the equilibrium price and quantity if supply increases?
a. Price and quantity will rise.
b. Price and quantity will fall.
c. Price will fall and quantity will increase.
d. Price will fall and quantity will stay the same.
8. The dead-weight loss from an excise tax
a. is greater if demand is perfectly inelastic.
b. is caused by a shift in consumer preferences when the tax is raised.
c. is the lost surplus that results from higher prices and lower output resulting from the tax.
d. is the difference between consumer surplus and producer surplus.
Short Answer
The relationship between health care spending (E) and per capita national income (Y) was estimated using cross- section data from 31 developed countries. The resulting equation (HCE = -538.3 + 0.11 GDP) relates spending and GDP. What is the predicted value of HCE when GDP is 20,000?
Ans: 1,661.7
Calculation Problems
You are a consultant and have been employed by Stony Brook hospital to estimate the demand for its services. Your research indicates that the income elasticity of demand for the target market is +0.50; the price elasticity of demand is -0. 15; and the cross-price elasticity of demand with respect to the price of services at St. Elsewhere, a near-by hospital, is +0.35.
a. The price of services at St. Elsewhere falls by 10 percent. What happens to the quantity of services demanded at Stony Brook? (1 pt)
b. The price of services at Stony Brook falls by 10 percent. What happens to the quantity of services demanded at Stony Brook? (1 pt)
Ans:
a. Quantity demanded falls by 10*0.35= 3.5 percent.
b. Quantity demanded increases by 10*0. 15=1.5 percent
2022-06-30