Question 1

Which of the following best explains why health care expenditure in the United States is higher than in other countries, according to economic analysis?

Accepted Answer

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

Question 2

Suppose the marginal social benefit of vaccinations is given by $$D_2$$ and the marginal private benefit is $$D_1. If $$the market only considers $$D_1$$, what is the likely outcome?

Accepted Answer

The market will underprovide vaccinations, resulting in a deadweight loss.

Question 3

Which of the following is an example of adverse selection in the health insurance market?

Accepted Answer

People with higher health risks are more likely to purchase health insurance, raising premiums for everyone.

Question 4

A country has a health care system where the government owns most hospitals and employs most doctors. This system is best described as:

Accepted Answer

Socialized medicine

Question 5

If the U.S. government were to provide health care funded by payroll taxes, what would likely happen to the total compensation paid by firms?

Accepted Answer

It would remain about the same, as health insurance costs would be replaced by health care taxes.

Question 6

Which of the following is NOT a primary reason for the rapid rise in U.S. health care costs?

Accepted Answer

Rapidly increasing administrative costs and malpractice lawsuits

Question 7

What is the principal-agent problem as it relates to health care?

Accepted Answer

Doctors may pursue their own interests (such as ordering extra tests) rather than the interests of the insurance company or patient.

Question 8

Which policy tool is designed to reduce moral hazard among patients in health insurance?

Accepted Answer

Introducing deductibles and coinsurance

Question 9

If the demand for medical services increases due to insurance coverage, what happens to the market equilibrium according to the supply and demand model?

Accepted Answer

The equilibrium quantity increases, and the equilibrium price increases.

Question 10

Which of the following best describes a positive externality in health care?

Accepted Answer

Vaccinations reduce the chance of others getting sick, benefiting society.

Question 11

Suppose the government subsidizes vaccinations, shifting the demand curve from $$D_1 to$$ $$D_2. $$What is the expected effect on the market?

Accepted Answer

The quantity of vaccinations will increase, and deadweight loss will decrease.

Question 12

Which of the following is a likely consequence of the third-party payer system in U.S. health care?

Accepted Answer

Consumers have little incentive to limit their use of health care services, leading to overconsumption.

Question 13

Which of the following statements about the Affordable Care Act (ACA) is correct?

Accepted Answer

It introduced an individual mandate, expanded Medicaid eligibility, and regulated health insurance practices.

Question 14

Why are cross-country comparisons of health outcomes often difficult and potentially misleading?

Accepted Answer

Differences in data collection, health care delivery, lifestyle choices, and consumer preferences make comparisons problematic.

Question 15

Which of the following is an example of a market-based reform in health care?

Accepted Answer

Removing the tax break for employer-based health insurance to reduce overconsumption.

Question 16

If the U.S. population continues to age and medical technology advances, what is the likely effect on federal health care spending as a percentage of GDP?

Accepted Answer

It will increase, as older populations and new technologies require more spending.

Question 17

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

Accepted Answer

People use more health care services or take greater risks because they do not bear the full cost.

Question 18

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

Accepted Answer

Should society exclude pre-existing conditions to avoid adverse selection, even if it reduces coverage?

Question 19

Which of the following is a key feature of Japan's health care system?

Accepted Answer

Every resident is required to enroll in a nonprofit health insurance society or the national program, with substantial copayments.

The Economics of Health Care: Macroeconomic Perspectives

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