Introduction to Health Economics Final Exam Questions
Course Introduction
Introduction to Health Economics provides an overview of the fundamental economic principles and analytical tools essential for understanding how healthcare systems operate. The course explores key topics such as the allocation of healthcare resources, demand and supply of health services, health insurance markets, cost-effectiveness analysis, and the role of government in health care. Students will learn to evaluate economic incentives influencing healthcare providers and consumers, assess the impact of health policies, and apply economic reasoning to real-world health sector challenges. The course is designed to equip learners with the foundational skills needed to critically analyze the efficiency, equity, and effectiveness of health interventions and systems.
Recommended Textbook
Health Economics and Policy 5th Edition by
James W. Henderson
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14 Chapters
193 Verified Questions
193 Flashcards
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Page 2
Chapter 1: Usmedical Care: A System in Transition
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10 Verified Questions
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Sample Questions
Q1) The opportunity cost of investing in a new lithotripter (a machine that pulverizes kidney stones with sound waves) is
A)defined by the dollar cost of the equipment.
B)the same for every health care provider.
C)measured by the difference between the expected revenues from selling the services of the lithotripter and the invoice cost of the machine.
D)defined by the next best use of the money invested in the equipment.
E)impossible to calculate.
Answer: D
Q2) Charging higher prices for one category of patients in order to provide free or subsidized care to another group is called
A)price discrimination.
B)cost-shifting.
C)categorical costing.
D)reprehensible and unethical.
E)creative accounting.
Answer: B
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Chapter 2: Using E Conomics to Study Health Care Issues
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Sample Questions
Q1) Suppose angioplasty and coronary artery bypass graft (CABG) surgery are substitute treatment alternatives for coronary artery disease.What should happen to the equilibrium price and quantity of angioplasty procedures if a new CABG technique is introduced that is less invasive (requiring a 4 inch incision under the breast bone rather than cracking open the patient's rib cage) and requires one-third the recovery period of regular CABG surgery.
A)Both price and quantity will increase.
B)Both price and quantity will decrease.
C)Price will increase and quantity will decrease.
D)Price will decrease and quantity will increase.
E)The introduction of a new CABG procedure should have no effect on the price or quantity of angioplasty procedures.
Answer: B
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4
Chapter 3: Analyzing Medical Care Markets
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Sample Questions
Q1) Which of the following is not a result of moral hazard?
A)Deductibles and coinsurance.
B)Increased medical care spending.
C)Increased likelihood of visiting a physician.
D)Higher health insurance premiums.
E)All of the above result from moral hazard.
Answer: E
Q2) Under which of the following circumstances is the principal-agent problem likely to be most serious.
A)Between general practitioners and patients.
B)Between surgeons and patients.
C)Between hospitals and nurses.
D)Between dentists and physicians.
E)Between physicians and lawyers.
Answer: B
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Chapter 4: Economic Evaluation in Health Care
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Sample Questions
Q1) Researchers estimate QALYs in a number of different ways.One popular approach is called
A)the probability approach
B)the QoL approach
C)the standard gamble
D)the standard measure of well-being
E)the utility of life approach
Q2) The first country to require standardized cost-effectiveness analysis before a pharmaceutical drug would be approved for distribution and reimbursement was
A)the UK
B)France
C)Sweden
D)Norway
E)Australia
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Page 6
Chapter 5: The De Mand for Health and Medical Care
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Sample Questions
Q1) A critical assumption in the model of demand and supply is the independence of demand and supply curves.If the two are not independent, a shift in the supply curve can lead to a shift in the demand curve referred to as
A)supply-side economics.
B)supplier-induced demand.
C)supply shocks.
D)ceteris paribus.
E)the fallacy of supply.
Q2) Health care that actually harms the patient, such as an adverse reaction to a prescription drug is called
A)morbidity-related response.
B)defensive medicine.
C)adverse selection.
D)iatrogenic disease.
E)moral hazard.
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Chapter 6: The Market for Health Insurance
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Sample Questions
Q1) Many individuals without health insurance receive "free" care.What are the sources of most of the care they receive?
A)Public hospitals and clinics.
B)Private, not-for-profit hospitals.
C)Private, for-profit hospitals.
D)Multi-specialty physicians' practices.
E)Solo practitioners and their associates.
Q2) Early in U.S.history health insurance was provided to cover
A)income loss due disability or disease.
B)hospital expenses.
C)routine physicians' services.
D)the catastrophic cost of medical care including hospitalization and physicians' services.
E)medical costs due to specific diseases such as tuberculosis and alcoholism.
Q3) Indemnity insurance
A)reimburses for certain types of losses including fire and theft.
B)in the basis for most of the health insurance coverage in the U.S.
C)is often experience-rated with premiums based on expected losses.
D)is sometimes called "casualty insurance."
E)all of the above.
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Chapter 7: Managed Care
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Sample Questions
Q1) The health maintenance organization that contracts with individual physicians or group practices to provide care for a specified group of enrollees is called
A)a group-model HMO.
B)a staff-model HMO.
C)a network-model HMO.
D)an IPA.
E)a direct-contract HMO.
Q2) Some analysts are skeptical about managed care's long-term ability to control costs.What works for individuals may not work systemwide.This proposition is called A)stare decisis.
B)a priori reasoning.
C)the Peter Principle.
D)the ceteris paribus condition.
E)the fallacy of composition.
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Chapter 8: The Physicians Servic ES Market
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Sample Questions
Q1) The rate of return on an investment in medical education
A)is inversely related to the length of time spent in formal schooling.
B)is inversely related to income.
C)will increase with an increase in the availability of student loans.
D)is much higher than the rate of return on an undergraduate business degree.
E)is inversely related to the number of years in the profession.
Q2) Starting salaries for female OB/GYNs are higher than those of male OB/GYNs.What is the best explanation for this?
A)Female OB/GYNs have more human capital than male OB/GYNs.
B)Female OB/GYNs are smarter than male OB/GYNs.
C)The demand for female OB/GYNs is greater than the demand for male OB/GYNs.
D)The demand for female OB/GYNs is less than the demand for male OB/GYNs.
E)More males are in OB/GYN residency programs than females.
Q3) What is the equilibrium wage and level of employment under monopsony?
A)W<sub>1</sub> and E<sub>1</sub>.
B)W<sub>2</sub> and E<sub>0</sub>.
C)W<sub>0</sub> and E<sub>0</sub>.
D)W<sub>0</sub> and E<sub>1</sub>.
E)W<sub>0</sub> and E<sub>2</sub>.
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Page 10
Chapter 9: The Hospital Services Market
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Sample Questions
Q1) The dominant factor affecting medical care delivery and finance in the 1990s was
A)the Hill-Burton Act.
B)prospective payment for hospitals.
C)creation of Medicare and Medicaid.
D)the explosive growth of managed care.
E)ERISA.
Q2) The merger of two community hospitals located in the same geographic market is called
A)vertical integration.
B)horizontal integration.
C)a leveraged buyout.
D)a conglomerate merger.
E)a real shame since one of the hospitals will likely close.
Q3) Horizontal integration allows firms to do all of the following except
A)take advantage of cost savings due to economies of scale.
B)reduce administrative costs.
C)create brand identity.
D)fully integrate with primary care clinics and acute care nursing facilities.
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11
Chapter 10: The Market for Pharmaceuticals
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Sample Questions
Q1) One of the primary reasons that costly technology is being introduced into the health care system is
A)research scientists have successfully mapped the human genome.
B)high cost is synonymous with better outcomes.
C)third-party insurance finances most of the cost of care.
D)all of the above.
Q2) The regulatory agency with oversight responsibility for the pharmaceutical industry is the
A)IRS.
B)FDA.
C)SEC.
D)ITC.
E)ATT.
Q3) Rent-seeking behavior results in
A)increased economic activity by promoting efficiency.
B)lower economic activity by diverting resource to less-productive uses.
C)a more equitable distribution of income and wealth.
D)lower prices throughout the economy.
E)greater income and wealth in the private sector.
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Page 12
Chapter 11: Confounding Factors
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Sample Questions
Q1) An increase in the excise tax on alcohol
A)will have no effect on alcohol consumption.
B)will generate minimal tax revenues for the federal government.
C)coupled with a uniform drinking age nationwide would save lives.
D)will generate substantial revenues is demand is elastic.
E)all of the above.
Q2) The frequency of malpractice claims against physicians
A)is higher for general practitioners than any other specialty.
B)has increased dramatically since the mid-1980s for all specialties.
C)differs little among specialties.
D)is greater for those specialties that practice high-risk invasive procedures.
E)will continue to soar unless tort laws are reformed.
Q3) According to the National Center for Health Statistics
A)smoking prevalence in the U.S.is declining among both males and females.
B)over 500,000 deaths annually may be attributed to alcohol- and smoking-related illnesses.
C)smoking prevalence among 18-24 year olds is rising.
D)over 20 percent of females and 25 percent of males are regular smokers.]
E)all of the above are true.
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Page 13
Chapter 12: Policies That Enha Nce Access
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Sample Questions
Q1) Falling hospital admissions and shorter length of hospital stays beginning in the mid 1980s may be attributable to
A)the increase in the number of out-patient visits.
B)the introduction of the DRG system.
C)a healthier population and a reduced incidence of certain diseases.
D)a reduction in the number of staffed beds in community hospitals causing a shortage of available beds.
E)an increase in the use of pharmaceutical drugs in treating the elderly.
Q2) The only disease-specific group eligible for Medicare are those suffering from AIDS.
A)end-stage renal disease.
B)advanced coronary artery disease.
C)metastasized cancer.
D)diabetes
Q3) One of the most serious weaknesses in the Medicare system is that
A)patients are not able to choose their own physicians.
B)the definition of an episode of illness is too restrictive.
C)it provides poor insurance coverage for unusually long hospital stays.
D)patients must pay a deductible every time they enter the hospital.
E)Part B is voluntary.
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Page 14
Chapter 13: Policies to Contain Costs
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Sample Questions
Q1) The amount that a hospital will be paid for treating a Medicare patient is determined
A)before the patient ever sees a physician.
B).at the time of admission to the hospital.
C)at the point when the diagnosis is made.
D)after medical services are provided.
E)after the hospital bill is reviewed by Medicare auditors.
Q2) Which of the following statements is true concerning DRGs?
A)Soon after their implementation in 1983, the average length of stay in U.S.hospitals fell significantly.
B)Hospital operating margins fell dramatically immediately after implementation of the program.
C)The system encourages over-treatment of elderly patients.
D)The system encourages physicians to over-diagnose, referred to as "DRG creep."
E)Both a and d are true.
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15
Chapter 14: Medical Care Systems Worldwide
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Sample Questions
Q1) Which of the following is not a practice of Japanese physicians.
A)Performing a unusually large number of surgeries.
B)Seeing a large number of patients daily.
C)Dispensing medicine to their patients.
D)Accepting gifts of appreciation from their patients for special service.
E)Discharging patients from the hospital after relative short average stays.
Q2) The French respect individual freedoms even as they accept collective action to reach important national goals of social solidarity and equality.What has been the major cost of a government-run system in France?
A)The long waiting lists of expensive medical services.
B)The high out-of-pocket spending with over 80 percent of the population purchasing supplementary private insurance.
C)An erosion of the incomes of physicians relative to those of the average wage and salary worker.
D)An erosion of physician autonomy in making treatment decisions.
E)Both b and c are true.
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