Question 1

Which of the following best explains why health care expenditure in the United States is higher than in other countries?

Accepted Answer

The U.S. has higher demand for health care, a unique payment system, and high quality of care.

Question 2

Which of the following is an example of a positive externality in health care?

Accepted Answer

A person gets vaccinated, reducing the chance of others getting sick.

Question 3

Suppose the marginal social benefit of vaccinations is greater than the marginal private benefit. What is the likely market outcome?

Accepted Answer

Too few vaccinations will be provided, resulting in a deadweight loss.

Question 4

Which of the following best describes adverse selection in the health insurance market?

Accepted Answer

People who are more likely to use health insurance are more likely to buy it.

Question 5

What is the primary reason for the 'cost disease' in the health care sector?

Accepted Answer

Labor productivity in health care has not increased as much as in other sectors, but wages have risen.

Question 6

Which of the following policies is designed to reduce moral hazard among patients?

Accepted Answer

Introducing deductibles and coinsurance in health insurance plans.

Question 7

If the government subsidizes vaccinations, what happens to the equilibrium quantity and deadweight loss in the market for vaccinations?

Accepted Answer

Equilibrium quantity increases and deadweight loss decreases.

Question 8

Which of the following is NOT a reason why some Americans remain uninsured despite the Affordable Care Act?

Accepted Answer

They are required by law to have insurance and face penalties if they do not.

Question 9

In the context of health care, what is the principal-agent problem?

Accepted Answer

Doctors may pursue their own interests rather than those of the insurance company or patient.

Question 10

Which of the following best describes the effect of the third-party payer system on the demand for medical services?

Accepted Answer

It increases demand for medical services above the efficient level, creating a deadweight loss.

Question 11

Which of the following is a key feature of a single-payer health care system, such as Canada’s?

Accepted Answer

The government provides health insurance to all residents, but private companies provide care.

Question 12

Suppose the U.S. government introduces a public option for health insurance. What is a potential criticism of this policy?

Accepted Answer

It could destroy private insurance companies, leading to a single-payer system.

Question 13

Which of the following is a normative (value judgment) question related to health care policy?

Accepted Answer

Should the government mandate that all individuals carry health insurance?

Question 14

If the marginal social benefit of a medical service is given by $$MSB = 100 - 2Q$$ and the marginal private benefit is $$MPB = 80 - 2Q$$, what is the value of the positive externality at $$Q = 10$$?

Accepted Answer

$$MSB - MPB = (100 - 2 	imes 10) - (80 - 2 	imes 10) = 80 - 60 = 20$$

Question 15

Which of the following is a likely consequence of removing the tax break for employer-based health insurance?

Accepted Answer

Spending on employer-based insurance would decrease by 33%.

Question 16

Which of the following is NOT a reason why cross-country comparisons of health outcomes can be misleading?

Accepted Answer

Quality of care is easy to measure and compare.

Question 17

Which of the following best describes moral hazard in health insurance?

Accepted Answer

People use more health care services when they do not bear the full cost.

Question 18

If the U.S. government were to implement a 'Medicare for All' single-payer system, which of the following is a potential advantage cited by supporters?

Accepted Answer

Universal coverage and cost savings due to government bargaining power.

Question 19

Which of the following is the best example of a principal-agent problem in health care?

Accepted Answer

A doctor orders extra tests to avoid malpractice lawsuits, not necessarily to benefit the patient.

The Economics of Health Care: Macroeconomic Perspectives and Policy Debates

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