Question 1

________ tended to increase spending on health care in the United States.

Accepted Answer

A)   The aging of the U.S. population, rather than advances in medical technology, has
B)   Advances in medical technology, rather than the aging of the U.S. population, has
C)   The aging of the U.S. population, as well as advances in medical technology, have
D)   Neither the aging of the U.S. population, nor advances in medical technology, haveE) A) and D)
F) B) and D)

Question 2

Adverse selection in the market for health insurance arises because

Accepted Answer

A)   many insurance companies care more about profits than they do about providing services for their customers in the event of illness.
B)   the federal government intervenes in insurance markets by controlling prices and reimbursement policies.
C)   insurance companies are not allowed to charge premiums that are high enough to insure against "worst-case" illness.
D)   buyers of insurance know more than insurance companies about the likelihood of an illness for which buyers want insurance.E) A) and B)
F) All of the above

Question 3

Adverse selection will occur in a market as a result of

Accepted Answer

A)   asymmetric information.
B)   moral hazard.
C)   the sale of "lemons."
D)   rational ignorance.E) A) and D)
F) All of the above

Question 4

The difference between adverse selection and moral hazard is that

Accepted Answer

A)   moral hazard happens at the time parties enter into a transaction; adverse selection occurs after the transaction takes place.
B)   adverse selection happens at the time parties enter into a transaction; moral hazard occurs after the transaction takes place.
C)   moral hazard is the motive that is behind one party entering into a transaction with another party. Adverse selection refers to the other party being harmed by the transaction.
D)   moral hazard refers to the likelihood that a transaction will lead one party to be better off at the expense of the other party to the transaction. Adverse selection refers to the consequences of the transaction after it has occurred.E) None of the above
F) A) and C)

Question 5

The health care system in Canada is referred to as ________,and is a system in which the government provides national health insurance to all Canadian residents.

Accepted Answer

A)   an out-of-pocket system
B)   a single-payer health care system
C)   a universal health insurance system
D)   socialized medicineE) B) and D)
F) B) and C)

Question 6

Most doctors are employed by the government and most hospitals are owned by the government in

Accepted Answer

A)   Canada.
B)   Japan.
C)   the United Kingdom.
D)   the United States.E) All of the above
F) None of the above

Question 7

Insurance companies use deductibles and coinsurance to reduce moral hazard.

Accepted Answer

A) True 
 B)False

Question 8

In the United States in 2009,the percentage of people without some form of private health insurance was about

Accepted Answer

A)   17%.
B)   29%.
C)   46%.
D)   83%.E) None of the above
F) A) and C)

Question 9

Which of the following Nobel laureates became known for the study of asymmetric information?

Accepted Answer

A)   Gary Becker
B)   Michael Spence
C)   George Ackerlof
D)   Ronald CoaseE) None of the above
F) A) and C)

Question 10

In what ways do economists and policymakers who believe that the federal government should have a larger role in the health care system criticize the Patient Protection and Affordable Care Act (PPACA)?

Accepted Answer

These people believe that information pr...

Question 11

Because of asymmetric information,most used cars that are offered for sale will be sold for prices that are greater than their true value.Because of this fact,the used car market falls victim to

Accepted Answer

A)   the free rider problem.
B)   deadweight loss and economic inefficiency.
C)   a surplus of used cars.
D)   adverse selection.E) B) and C)
F) None of the above

Question 12

Two consequences of asymmetric information are adverse selection and moral hazard.An important distinction between the two is

Accepted Answer

A)   adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed.
B)   moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed.
C)   adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity.
D)   moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity.E) All of the above
F) A) and D)

Question 13

Of the following,the most to the rapid rise in health care costs in the United States can be attributed to

Accepted Answer

A)   the cost of malpractice insurance.
B)   the cost to treat uninsured patients.
C)   slow growth in labor productivity in health care.
D)   the cost of malpractice lawsuit settlements.E) B) and C)
F) A) and D)

Question 14

In most circumstances,employees pay taxes on the value of health insurance their employers provide them.

Accepted Answer

A) True 
 B)False

Question 15

Explain why is it difficult for people who are seriously ill to buy health insurance.

Accepted Answer

A key difficulty facing insurance compan...

Question 16

Suppose that in a market for used cars,there are good used cars and bad used cars (lemons) .Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon.Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each.Buyers cannot tell if a used car is reliable or is a lemon.Based on this information,what is the likely outcome in the market for used cars?

Accepted Answer

A)   Both good used cars and lemons will sell for $4,500 each.
B)   Only lemons will sell, for $800 each.
C)   Both good used cars and lemons will sell for $1,000 each.
D)   Most used cars offered for sale will be lemons.E) None of the above
F) A) and B)

Question 17

A doctor pursuing the interests of his patients rather than his own interests is an example of the principal-agent problem.

Accepted Answer

A) True 
 B)False

Question 18

One consequence of adverse selection in the market for used cars is that most used cars sold will be lemons.

Accepted Answer

A) True 
 B)False

Question 19

Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Accepted Answer

A) True 
 B)False

Question 20

Substantial co-payments are typically not required as a part of the health care system in

Accepted Answer

A)   Canada and the United Kingdom.
B)   Japan and Canada.
C)   the United States and Japan.
D)   Japan and the United Kingdom.E) None of the above
F) C) and D)

Exam 5: The Economics of Health Care

Explain why is it difficult for people who are seriously ill to buy health insurance.

Correct Answer
verified
A key difficulty facing insurance compan...
View Answer

A doctor pursuing the interests of his patients rather than his own interests is an example of the principal-agent problem.

Correct Answer
verified

Which of the following Nobel laureates became known for the study of asymmetric information?

Correct Answer
verified

Most doctors are employed by the government and most hospitals are owned by the government in

Correct Answer
verified

Correct Answer
verified

________ tended to increase spending on health care in the United States.

Correct Answer
verified

Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Correct Answer
verified

In most circumstances,employees pay taxes on the value of health insurance their employers provide them.

Correct Answer
verified

One consequence of adverse selection in the market for used cars is that most used cars sold will be lemons.

Correct Answer
verified

Because of asymmetric information,most used cars that are offered for sale will be sold for prices that are greater than their true value.Because of this fact,the used car market falls victim to

Correct Answer
verified

Of the following,the most to the rapid rise in health care costs in the United States can be attributed to

Correct Answer
verified

Insurance companies use deductibles and coinsurance to reduce moral hazard.

Correct Answer
verified

Two consequences of asymmetric information are adverse selection and moral hazard.An important distinction between the two is

Correct Answer
verified

Adverse selection will occur in a market as a result of

Correct Answer
verified

In what ways do economists and policymakers who believe that the federal government should have a larger role in the health care system criticize the Patient Protection and Affordable Care Act (PPACA)?

Correct Answer
verified
These people believe that information pr...
View Answer

In the United States in 2009,the percentage of people without some form of private health insurance was about

Correct Answer
verified

The health care system in Canada is referred to as ________,and is a system in which the government provides national health insurance to all Canadian residents.

Correct Answer
verified

Adverse selection in the market for health insurance arises because

Correct Answer
verified

The difference between adverse selection and moral hazard is that

Correct Answer
verified

Substantial co-payments are typically not required as a part of the health care system in

Correct Answer
verified

Exam 5: The Economics of Health Care

Explain why is it difficult for people who are seriously ill to buy health insurance.

Correct AnswerverifiedA key difficulty facing insurance compan...View AnswerShow Answer

A doctor pursuing the interests of his patients rather than his own interests is an example of the principal-agent problem.

Correct AnswerverifiedShow Answer

Which of the following Nobel laureates became known for the study of asymmetric information?

Correct AnswerverifiedShow Answer

Most doctors are employed by the government and most hospitals are owned by the government in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

________ tended to increase spending on health care in the United States.

Correct AnswerverifiedShow Answer

Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.

Correct AnswerverifiedShow Answer

In most circumstances,employees pay taxes on the value of health insurance their employers provide them.

Correct AnswerverifiedShow Answer

One consequence of adverse selection in the market for used cars is that most used cars sold will be lemons.

Correct AnswerverifiedShow Answer

Because of asymmetric information,most used cars that are offered for sale will be sold for prices that are greater than their true value.Because of this fact,the used car market falls victim to

Correct AnswerverifiedShow Answer

Of the following,the most to the rapid rise in health care costs in the United States can be attributed to

Correct AnswerverifiedShow Answer

Insurance companies use deductibles and coinsurance to reduce moral hazard.

Correct AnswerverifiedShow Answer

Two consequences of asymmetric information are adverse selection and moral hazard.An important distinction between the two is

Correct AnswerverifiedShow Answer

Adverse selection will occur in a market as a result of

Correct AnswerverifiedShow Answer

In what ways do economists and policymakers who believe that the federal government should have a larger role in the health care system criticize the Patient Protection and Affordable Care Act (PPACA)?

Correct AnswerverifiedThese people believe that information pr...View AnswerShow Answer

In the United States in 2009,the percentage of people without some form of private health insurance was about

Correct AnswerverifiedShow Answer

The health care system in Canada is referred to as ________,and is a system in which the government provides national health insurance to all Canadian residents.

Correct AnswerverifiedShow Answer

Adverse selection in the market for health insurance arises because

Correct AnswerverifiedShow Answer

The difference between adverse selection and moral hazard is that

Correct AnswerverifiedShow Answer

Substantial co-payments are typically not required as a part of the health care system in

Correct AnswerverifiedShow Answer

Correct Answer
verified
A key difficulty facing insurance compan...
View Answer

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Correct Answer
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These people believe that information pr...
View Answer

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