Healthcare Delivery Systems
Final Exam Questions
Course Introduction
Healthcare Delivery Systems explores the structure, function, and dynamics of healthcare organizations and services within local, national, and global contexts. The course examines components of healthcare systems including hospitals, long-term care, primary care, mental health services, and public health agencies, with a focus on how care is organized, financed, regulated, and delivered. Students analyze the roles of various healthcare professionals, the impact of policy and technology, and current trends in quality improvement, access, and health equity. Through case studies and real-world examples, the course provides insight into challenges and innovations shaping the future of healthcare delivery.
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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Chapter 1: An Introduction to the Economics of Medical Care
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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) Which of the following will not increase the demand for medical services?
A)An increase in income
B)New cost-saving technology in MRI machines
C)An outbreak of the flu
D)An increase in the population
Answer: B
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Page 3
Chapter 2: The Role of Government in Health and Medical Care
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Q1) Which of the following transfers is most efficient?
A)$10 itunes gift card
B)$100 medical care tax credit
C)$100 in cash
D)$100 health insurance subsidy
Answer: C
Q2) Externalities occurred due to
A)A lack of property rights
B)A lack of government oversight
C)Poor choices made by firms
D)Poor choices made by consumers
Answer: A
Q3) Which of the following is not an example of a demand subsidy?
A)Medicare
B)Medicaid
C)SCHIP
D)Veterans Administration medical system
Answer: D
Q4) 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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Q1) Which of the following statements is true about the economic theory of regulation
A)Politicians seek to reduce all barriers to entry.
B)Politicians believe the best method to gain votes is by adopting policies that maximize social welfare.
C)Politicians seek to maximize the benefits of influential political groups.
D)Politicians seek to maximize benefits to the poor.
Answer: C
Q2) Which of the following statements is true about the public interest theory?
A)Politicians support policies in the public interest if it will lead to more political support.
B)Politicians will seek to redistribute funds to groups that wield greater political power.
C)Politicians will seek more efficient markets even at the cost of reducing access to care for the poor.
D)Politicians will seek to redistribute funds to the poor even at the cost of efficiency.
Answer: D
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Chapter 4: The Production of Health: the Impact of Medical
Services on Health
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Q1) The QALYs (quality adjusted life years)measure of health captures the idea that people may be willing to accept
A)Longer life with better health.
B)Shorter life with better health.
C)Longer life with worse health.
D)Shorter life with worse health.
Q2) 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
Q3) 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
Q4) Compare cost-utility analysis to cost-effective analysis.
Page 6
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Chapter 5: An Overview of the Medical Care Sector
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Q1) Consider an increase in the demand for dentures.As the supply curve becomes _____ elastic,the change in quantity supplied becomes_______.
A)More;smaller
B)More;larger
C)Less;larger
D)None of the above
Q2) 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
Q3) As the average age in the population increases,the demand for hospitals will __________ and the demand for nursing homes will ___________ .
A)Increase;increase
B)Increase;decrease
C)Decrease;decrease
D)Decrease;increase
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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Q1) Discuss the role of physicians on patients' demand for medical services.
Q2) As co-insurance rates increase,patients become
A)More sensitive to changes in price,which leads to over-consumption
B)Less sensitive to changes in price,which leads to over-consumption
C)More sensitive to changes in price,which leads to under-consumption
D)Less sensitive to changes in price,which leads to under-consumption
Q3) 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
Q4) Which one of the following studies determined the allocation of medical services based on need?
A)Lee and Jones research of the 1930s
B)Hill-Burton research of the 1940s
C)Both a and b
D)Neither a nor b
Q5) Discuss the role of "time cost" on the demand for medical services.
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Chapter 7: The Demand for Health Insurance
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Q1) Suppose there are two types of people in an insurance market: high and low risks.The high-risk person is sick 10% of the time and the low-risk person is sick 5% of the time.The probability of any individual being high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.If the insurer cannot distinguish between the two types,but the two individuals know their types,what will be the equilibrium premium?
Q2) Lucy Ramirez has $22,500 in income.After a recent trip to Cuba,she discovers that there is a 25% chance of acquiring Cubanitis.The disease is 100% curable but requires the Fidelonomy procedure (at a cost of $12,500).The Kuba-Kuba Insurance Company offers a policy that will cover the Fidelonomy.The premium they charge is $4,000.Of this premium,the pure premium is __________ and the loading fee is _______.
A)$4,000;$0
B)$3,125;$875
C)$875;$3125
D)Not enough information to answer.
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 Overview
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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) Economies of scale
A)Might be more easily realized in an emergency room rather than a physician's office.
B)Depend on the spreading of minimal fixed costs over a number of procedures.
C)Depend on the spreading of high variable costs over a number of procedures.
D)Depend on the spreading of high marginal costs over a number of procedures.
E)Depend on the spreading of high fixed costs over a number of procedures.
Q3) Suppose there are two hospitals in the market.The inverse demand for Hospital 1 is P = 100 - 2Q and the inverse demand for Hospital 2 is P = 100 - Q.What is the inverse market demand?
A)P = 100 - 3Q
B)P = 200 - 3Q
C)P = 100 - 2 / 3Q
D)P = 200 - 1 / 3Q
Q4) If a hospital displays decreasing average costs on output,should the hospital be regulated even though it is more efficient?
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Page 10
Chapter 9: Market Competition in Medical Care
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Q1) The increased supply of physicians was most aided by
A)The increased use of health insurance
B)The Health Professions Educational Assistance Act (HPEA)
C)The immigration of foreign medical graduates
D)The rise in physician incomes
Q2) Which of the following policies was not a cost-containment policy?
A)Increasing the Medicare payroll tax
B)Using price controls
C)Mandating the use of Certificate of Need (CON)on hospital capital
D)Decreasing physician reimbursement
E)All of the above
Q3) Compare the quality difference in care between HMOs and traditional health insurance.
Q4) Which of the following is not true about health insurance?
A)Has driven up the cost of health care.
B)Creates a moral hazard problem for many people.
C)Makes demand for health care more elastic.
D)Is a means of dealing with the uncertainty that surrounds health care.
Q5) What does the Rand HMO experiment tell us about the effect of HMOs on hospitalized utilization?
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Chapter 10: The Market for Health Insurance: Its
Performance and Structure
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Q1) 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
Q2) Assume a high-risk;person has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk averse.What is the community rating premium for a neighborhood containing exactly half of each type of person?
A)$300
B)$250
C)$150
D)$50
Q3) Assume the health insurance market is perfectly competitive.If the benefit/premium ratio is 0.90 and the premium is $1,000,how much are administrative cost?
Q4) Do high concentration ratios have an effect on input prices?
Q5) Explain why insurance companies may be hesitant to increase relative premiums.
Page 12
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Chapter 11: The Physician Services Market
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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) Which of the following statements about the distribution of physicians among specialties is true in the United States?
A)The majority of physicians specialize in general/family practice
B)There are twice as many generalists as there are specialists
C)There are twice as many specialists as there are generalists
D)The specialty distribution in the United States is similar to that of the rest of the world
E)None of the above
Q3) How did physicians accepting Medicare assignments cause price discrimination?
Q4) Explain the effects of advertising on physician services.
Q5) What are the reasons why both the size of medical groups and their numbers have Explain.
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Chapter 12: The Market for Hospital Services
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Q1) Calculate the Herfindahl-Hirschman Index (HHI)for five hospitals in a market with the following market shares: 50%,25%,10%,10%,and 5%.Is this market more or less concentrated than a market with equal market shares and the same number of firms?
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 Rural Hospital falls by 10%.What happens to the quantity of services demanded at City Hospital?
A)Quantity demanded rises by 35.0%
B)Quantity demanded falls by 3.5%
C)Quantity demanded falls by 1.5%
D)Quantity demanded rises by 5.0%
E)Quantity demanded stays the same
Q3) What are the determinants of a geographic market?
Q4) Explain why a hospital can be considered a multiproduct firm.
Q5) Explain how Certificates of Need (CON)may be anticompetitive.
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Chapter 13: The Pharmaceutical Industry
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Q1) Drug after formularies
A)Help manufacturers determine which drugs are efficacious
B)Help salesmen determine what to sell
C)Determine which drugs will be covered by third-party payers
D)Both b and c
Q2) If the demand for Lipitor is P = 1000 - 10Q (MR = 1000 -20Q)in the United States and P = 500 -20Q (MR = 500 - 40Q)in Canada,at what price would Lipitor sell at in each country? Assume marginal cost is equal to $100.
Q3) Describe methods used by brand-name pharmaceutical companies to delay the entry of generic drugs.
Q4) Explain what would happen to the price of drugs,both domestic and abroad,if the United States allowed the reimportation of drugs.
Q5) Which policy simplified and streamlined the process for FDA approval of generic drugs in exchange for granting patent extensions to innovative drugs?
A)Hatch-Waxman Act
B)1962 Drug Amendment
C)Medicare Modernization Act
D)None of the above
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Chapter 14: Health Manpower Shortages and Surpluses:
Definitions, measurement, and Policies
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Q1) Friedman and Kuznets found that physicians earn
A)32% less than dentists
B)About the same as dentists
C)32% more than dentists
Q2) Suppose the demand for labor is w = 300 - 2Q and the supply of labor is w = Q.If a price floor is set at $200,then the equilibrium
A)Wage is $100 and quantity is 100
B)Wage is $100 and quantity is 50
C)Wage is $200 and quantity is 100
D)Wage is $200 and quantity is 50
Q3) Jefferson County has 200,000 residents.During any given year,2% of the population will develop a medical condition that requires 10 hours of physician treatment.Assuming the average physician works 2,000 hours per year,how many physicians are needed in Jefferson County? A)6
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Chapter 15: The Market for Physician Manpower
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Q1) What are the advantages of using reexamination instead of additional hours of continual education to recertify physicians?
Q2) Describe how physicians can use price-discrimination to serve both high- and low-income patients.
Q3) Explain why barriers to entry,such as additional education and licensing,are preferred to malpractice lawsuits to prevent negligent or low-quality physicians from doing harm.
Q4) Which allowed physicians to begin advertising their services without punishment?
A)Flexner Report
B)Removal of antitrust protection
C)Gies Report
D)P4P
Q5) Explain how barriers to entry can cause static shortages of health professionals.
Q6) Fee-splitting occurs when
A)A specialist splits their charge with the hospital that gives them privileges
B)A specialist splits their charge with the referring physician
C)A physician splits their charge with an assisting nurse
D)A physician splits their charge with the patient's insurance company
Q7) Describe how barriers to entry would decrease the quality of care.
Page 17
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Chapter 16: The Market for Medical Education: Equity and Efficiency
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Q1) What are some of the concerns associated with medical school tuition that reflect the true cost of a medical education?
Q2) Currently,tuition paid by medical students constitutes
A)Less than 5% of total revenue
B)Less than 10% of total revenue
C)Less than 15% of total revenue
D)Less than 20% of total revenue
Q3) What would be an economic justification for subsidizing a medical education?
Q4) Large government subsidies allow medical schools to set tuition
A)Higher than the competitive price
B)Lower than the competitive price but above cost
C)Lower than the competitive price and below cost
D)None of the above
Q5) Let the private demand for medical research be P = 90-Q and let the supply for medical research equal P = Q.
a.Find the equilibrium price and quantity.
b.Suppose each unit of medical research has a positive externality such that the marginal social benefit is P = 90 - .5Q.What is the socially optimal level of research?
Q6) How do we determine economic efficiency in the supply of medical schools?
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Chapter 17: The Market for Registered Nurses
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Q1) An increase in the minimum required nurse ratio will cause
A)An increase in the wage of nurses and the supply curve to increase
B)An increase in the wage of nurses and the supply curve to decrease
C)A decrease in the wage of nurses and the demand curve to increase
D)An increase in both wages and demand for nurses
Q2) As a result of the NTA,
A)Nursing enrollments and wages increased immediately
B)Nursing enrollments and wages did not increase until the late 1980s
C)Nursing enrollments increased immediately,but wages lagged
D)Nurses' wages increased immediately,but enrollment lagged
Q3) An increase in the mandated nurse-hospital ratio will lead to
A)Better patient outcomes
B)Higher nurses' wages
C)Both a and b
D)Neither a nor b
Q4) Explain why the ANA would support educational subsidies to attend nursing school.
Q5) What are the benefits and cost of a comparable worth-based wage determination system.
Q6) Explain why prior to 1966,the nursing market was experiencing a static shortage.
Page 19
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Chapter 18: National Health Insurance: an Approach to the
Redistribution of Medical Care
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Q1) In 2007,_______ of working adults in the U.S.were uninsured.
A)Greater than 25%
B)Between 20 and 25%
C)Between 15 and 20%
D)Less than 15%
Q2) Medicaid is a means-tested ___________ program that is administered through the _________ government
A)Federal;federal
B)State;state
C)Federal;state
D)State;federal
Q3) 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
Q4) According to Long and Stockley,what are the benefits and cost of the Massachusetts Health Plan?
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Q5) What are the problems with an employer health insurance mandate?
Q6) Why is deficit financing politically appealing?
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Page 21