Economics of Public Health Exam Practice Tests
Course Introduction
Economics of Public Health explores the intersection of economic theories and principles with public health policies and interventions. The course examines how resources are allocated within the health sector, the economic impact of health behaviors, and the cost-effectiveness of prevention and treatment programs. Students will analyze the role of government and markets in addressing health disparities, consider methods for evaluating health programs, and discuss the financial implications of public health initiatives. By applying economic tools, learners gain insights into how to design and advocate for effective, efficient, and equitable public health strategies.
Recommended Textbook Health Care Economics 7th Edition by
Paul J. Feldstein
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18 Chapters
357 Verified Questions
357 Flashcards
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Page 2
Chapter 1: An Introduction to the Economics of Medical Care
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20 Verified Questions
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Sample Questions
Q1) Suppose you are considering becoming a physician.Your current job has an annual salary of $100,000,but you hate your job.If offered a job as a physician for $90,000 you would be indifferent between your current job and this new job.What is your opportunity cost of staying at your job?
A)-$10,000
B)$10,000
C)$100,000
D)$90,000
Answer: C
Q2) Supply curves are upward sloping because of
A)Law of increasing marginal cost
B)Law of diminishing marginal cost
C)Law of increasing marginal returns
D)Law of diminishing marginal returns
Answer: D
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Chapter 2: The Role of Government in Health and Medical Care
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Sample Questions
Q1) Which of the following is not an "in kind" transfer?
A)$10 itunes gift card
B)$100 medical care tax credit
C)$100 in cash
D)All of the above
Answer: C
Q2) Which of the following are reasons for the government to intervene in the medical market?
A)Provide consumer protection
B)Internalize externalities
C)Correct market failure (i.e.,barriers to entry)
D)All of the above
Answer: D
Q3) Graph the Marginal Private Cost (MPC)and the Marginal Private Benefit.
Answer: 11ea48be_8914_81ef_b057_a5da371a5ee7_TB2105_00
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Chapter 3: Health Policy and the Legislative Marketplace
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Sample Questions
Q1) The AMA would support an
A)Expansion in the number of nurses
B)Expansion in the types of procedures a nurse can perform
C)Both a and b
D)Neither a nor b
Answer: A
Q2) Which of the following associations would support an increase in the education requirements for physician assistants?
A)AMA
B)ANA
C)Both a and b
D)Neither a and b
Answer: C
Q3) The ADA would support and should be an expansion in _______ dental insurance
A)Public
B)Private
C)Both a and b
D)Neither a nor b
Answer: B
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Page 5
Chapter 4: The Production of Health: the Impact of Medical
Services on Health
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Sample Questions
Q1) To allocate resources efficiently,one should consider
A)The relative size of each program
B)The marginal product of each program
C)The average product of each program
D)The level of need in each program
Q2) A process that determines how many dollars will be returned for dollars invested in a health promotion program is called
A)cost-benefit analysis
B)cost-revenue analysis
C)cost-utility analysis
D)cost-effectiveness analysis
Q3) Suppose a hospital is currently producing 100 inpatient days per day with 20 physicians and 50 nurses.The hospital receives a grant to provide low-cost care.The grant includes funds to double the size of the nursing staff.After the grant,the hospital produces 150 inpatient days per day.What is the marginal product of nurses?
A)0 inpatient days
B)1 inpatient days
C)2 inpatient days
D)3 inpatient days
Page 6
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Chapter 5: An Overview of the Medical Care Sector
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Sample Questions
Q1) If nurses and physicians are complements in the hospital production function,then an increase in the tuition to nursing school will
A)Increase the quantity demanded for both nurses and physicians.
B)Decrease the quantity demanded for both nurses and physicians.
C)Increases the quantity demanded for nurses,but decreases the demand for physicians.
D)Decreases the quantity demanded for nurses,but increases the demand for physicians.
Q2) Currently,the federal government subsidizes medical education in the form of reimbursement for direct medical education (DME)and indirect medical education (IME)expenditures.These expenditures are reimbursed via Medicaid and Medicare.How would the three markets react to an elimination of this federal subsidy?
Q3) An increase in the demand for medical schools will
A)Increase the price of medical service
B)Increase the quantity of medical services
C)Both a and b
D)Neither a nor b
Q4) What are the prices and quantities in each of the three markets of the medical sector?
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Chapter 6: The Demand for Medical Care
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Sample Questions
Q1) Assume that the patient's out-of-pocket price for visiting a physician is $30 and that the time costs are equal to $50.Assume the elasticity of the medical service,with respect to the total price,was -2.0.If the out-of-pocket price dropped 50 percent,by what percent does the number of visits change?
Q2) Education is believed to
A)Increase the demand for health because higher educated people also have higher wages
B)Decrease the demand for health because higher educated people experience a greater return to their health investments.
C)Have no effect on the demand for health
Q3) According to Michael Grossman,consumers have a demand for health because
A)It is a consumption commodity
B)It is an investment commodity
C)Both a and b
D)Neither a nor b
Q4) Discuss the results of the RAND Health Insurance Experiment.Specifically,did the generosity of the health insurance plan affect the level of medical care use? Did the generosity of the health insurance plan affect overall health,on average?
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Page 8
Chapter 7: The Demand for Health Insurance
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Sample Questions
Q1) For a risk-averse consumer
A)The expected utility of wealth is greater than the utility of expected wealth
B)The expected utility of wealth is equal to the utility of expected wealth
C)The expected utility of wealth is less than the utility of expected wealth
D)There is no relationship between the expected utility of wealth and the utility of expected wealth
Q2) Calculate the expected return (or expected winnings)in a game where a person wins $1 with the probability of 1/3 ,$5 with the probability of1/6 ,and $0 with the probability of 1/2 .
A)0
B)$1 1 / 6
C)$2 1 / 6
D)$3
Q3) Suppose the inverse demand for physician office visits is P = 1000 - 20Q.Now suppose an insurance policy provides a co-insurance rate of 50%.Graph the new demand function with health insurance.
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Chapter 8: The Supply of Medical Care: an
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Sample Questions
Q1) One of the benefits of a national health insurance program is that it guarantees a large insurance pool.Why is this a benefit? What economic principle is being addressed here?
Q2) When the patient _______ information,the physician demand curve becomes _____.
A)Lacks;more elastic
B)Lacks;less elastic
C)Lacks;has no effect on demand
D)More;less
Q3) In the short run,profits can
A)Exceed normal profit
B)Be equal to normal profit
C)Be below normal profit
D)All of the above
Q4) The cost of a national health insurance program would be____ and the availability of services _______ when supply is more ________.
A)Greater;diminished;inelastic
B)Less;diminished;inelastic
C)Greater;diminished;elastic
D)Less;enhanced;inelastic
10
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Chapter 9: Market Competition in Medical Care
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Sample Questions
Q1) Tax exemption of health insurance leads to _________ market distortion._________ health insurance choices leads to _________ market distortion.
A)More;More;more
B)More;More;less
C)Less;Less;less
D)More;More;more.
E)None of the above
Q2) __________ place the incentive to reduce cost on the __________
A)PPO;provider B)POS;provider C)FFS;provider
D)PPO;consumer
Q3) Health insurance providers in order of increasing management are A)FFS,PPO,HMO
B)PPO,FFS,HMO
C)FFS,HMO,PPO
D)PPO,HMO,FFS
Q4) Explain how the lack of information to patients about plans and physicians leads to more market distortions.
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Chapter 10: The Market for Health Insurance: Its
Performance and Structure
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Sample Questions
Q1) Do high concentration ratios have an effect on input prices?
Q2) A strong individual mandate with large fines is __________ by insurers because it will _______ adverse selection.
A)Supported;reduce
B)Supported;increase
C)Not supported;reduce
D)Not supported;increase
Q3) Blue Cross and Blue Shield uses
A)Experience rating premiums
B)Community rating premiums
C)Uniform rating premiums
Q4) Explain why insurance companies may be hesitant to increase relative premiums.
Q5) Are high concentration ratios indicative of market power in the health insurance industry?
Q6) Monopsony power by health insurance plans can lead to
A)Fewer providers and higher quality of care
B)Fewer providers and lower quality of care
C)More providers and higher quality of care
D)More providers and lower quality of care
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Chapter 11: The Physician Services Market
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Sample Questions
Q1) Which of the following would increase the supply of physicians?
A)Increasing the cost of attending medical school
B)More scholarships and grants to cover medical school tuition
C)Increasing the medical school entrance requirements to include 15 hours of economics
D)Making it easier for plaintiffs to prove medical malpractice claims
E)Paying medical schools to eliminate residency opportunities in some specialties
Q2) Define defensive medicine and describe what Baicker,Fisher,and Chandra found as the cost of defensive medicine.
Q3) Which of these would be likely to reduce the extent of supplier-induced demand?
A)Physicians being remunerated on a "capitation" basis rather than a "fee for service" basis
B)An increase in the number of physicians coming out of medical schools
C)A reduction in the medical and health knowledge of the general population
D)Less advertising and other competitive behaviors by physicians
Q4) Explain the effects of advertising on physician services.
Q5) What is supplier-induced demand and explain its affects on medical prices and services?
Q6) How did physicians accepting Medicare assignments cause price discrimination?
Page 13
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Chapter 12: The Market for Hospital Services
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Sample Questions
Q1) Over the past 20 years,the ability of hospitals to cost-shift has
A)Increased
B)Decreased
C)Remained unchanged
Q2) You are a consultant and have been employed by a large inner-city hospital called City 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 Rural Hospital,a near-by hospital,is +0.35.Answer the following questions.
The price of services at City Hospital falls by 10%.What happens to the quantity of services demanded by Rural Hospital?
A)Quantity demanded at City Hospital increases by 15.0%
B)Quantity demanded at City Hospital increases by 1.5%
C)Quantity demanded at Rural Hospital rises by 3.5%
D)Quantity demanded at Rural Hospital falls by 5.0%
E)Quantity demanded at City Hospital rises by 5.0%
Q3) What are the advantages of using the Herfindahl-Hirschman Index versus a concentration ratio?
Q4) Explain why a hospital can be considered a multiproduct firm.
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Chapter 13: The Pharmaceutical Industry
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Sample Questions
Q1) Suppose there is a new drug in the pipeline that will reduce infant mortality in half from .05 to .025,but the drug will not be approved by the FDA for 3 years.If 10,000 children are afflicted each year,what is the number of statistical deaths that could have been avoided with earlier FDA approval?
Q2) Pharmaceutical firms charge different prices in different countries after because A)Government regulations are different between countries
B)Demand elasticities are different between countries
C)Both a and b
D)Neither a nor b
Q3) Research and development (R&D)is considered a _____ because _____:
A)Variable cost;more R&D leads to more quantity produced
B)Variable cost;more R&D leads to higher profits
C)Fixed cost;it does not vary with current output
D)Fixed cost;it is related to advertising
Q4) For pharmaceutical drugs,R&D expenditures account for
A)Over two-thirds of expenses
B)Between one-third and two-thirds of total expenses
C)Less than one-third of expenses
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Page 15
Chapter 14: Health Manpower Shortages and Surpluses:
Definitions, measurement, and Policies
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Sample Questions
Q1) Which of the following is a normative statement?
A)Nonprofit hospitals are inefficient
B)Physicians should be more cost conscious
C)Government-sponsored health insurance will provide lower premiums
D)All of the above
Q2) Suppose the federal government would like to protect health professional jobs by only allowing U.S.citizens to hold positions in hospitals,regardless of where they trained.Is this a good policy? Why or why not?
Q3) Suppose the demand for labor is w = 300 - 2Q and the supply of labor is w = Q.If a price floor is set at $50,then the equilibrium
A)Wage is $100 and quantity is 100
B)Wage is $100 and quantity is 50
C)Wage is $50 and quantity is 100
D)Wage is $50 and quantity is 50
Q4) The number of physicians per 100,000 has risen between 1980 to 2007 by
A)More than 50%
B)Between 50% and 25%
C)Less than 25%
Page 16
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Chapter 15: The Market for Physician Manpower
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Sample Questions
Q1) Which allowed physicians to begin advertising their services without punishment?
A)Flexner Report
B)Removal of antitrust protection
C)Gies Report
D)P4P
Q2) How is advertising similar to physician inducement?
A)Both activities can generate increased revenue
B)Both activities increase costs
C)Both activities provide no social value
D)Both a and b
Q3) Education,feedback,and surveillance programs are concerned with:
A)Reducing the amount of inappropriate medical care
B)Increasing patient access to the latest medical technology
C)Retaining a qualified hospital staff
D)The low enrollments in medical school
Q4) Describe how physicians can use price-discrimination to serve both high- and low-income patients.
Q5) Explain how barriers to entry can cause static shortages of health professionals.
Q6) Describe how barriers to entry would decrease the quality of care.
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Chapter 16: The Market for Medical Education: Equity and Efficiency
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Q1) Currently,there is an
A)Excess supply of medical schools as indicated by the low price
B)Excess demand for medical education as indicated by the excess number of applications to medical school
C)Both a and b
D)Neither a nor b
Q2) The net effect of the externality on welfare is equal to
A)d + f
B)i
C)h
D)i + d + f + h
Q3) A new health reform bill proposes to reduce the shortage in primary care physicians by increasing the number of medical schools.This will lead to
A)An increase in the supply curve
B)An increase in the quantity demanded for medical school
C)Both a and b
D)Neither a nor b
Q4) How do we determine economic efficiency in the supply of medical schools?
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Q5) What would be an economic justification for subsidizing a medical education?
Chapter 17: The Market for Registered Nurses
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Q1) A decrease in the demand for nurses will lead to
A)An increase in wages in the short-run and an increase in the stock of nurses in the long-run
B)A decrease in wages in the short-run and an increase in the stock of nurses in the long-run
C)An increase in wages in the short-run and a decrease in the stock of nurses in the long-run
D)An decrease in wages in the short-run and an decrease in the stock of nurses in the long-run
Q2) Explain why prior to 1966,the nursing market was experiencing a static shortage.
Q3) According to Gruber and Kleiner,in-hospital mortality due to a nurses' strike
A)Increased by 19%
B)Decreased by 19%
C)Increased by 6.5%
D)Decreased by 6.5%
Q4) Two broad purposes of the NTA were to
A)Increase nurses' pay and the nursing quality
B)Increase the number of nurses and the nursing quality
C)Increase the number of nurses and nurses' pay
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Chapter 18: National Health Insurance: an Approach to the
Redistribution of Medical Care
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Sample Questions
Q1) Prescription drug coverage for the elderly is provided by
A)Medicare Part A
B)Medicare Part B
C)Medicare Part C
D)Medicare Part D
Q2) The consequences of tax-exempt employer-sponsored health insurance are
A)Inequity,the insurance benefits the rich
B)Inefficient,the subsidized price of health care causes overconsumption
C)Both a and b
D)Neither a nor b
Q3) Medicare expenditures can be reduced by
A)Reducing payments to the suppliers of Medicare services
B)Increasing the Medicare payroll tax
C)Making Medicare a defined contribution program
D)All of the above
Q4) Equal treatment for equal needs can be achieved by
A)Income dependent subsidies
B)Equal subsidies regardless of income
C)Free health care
D)None of the above
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