Test Bank for Economics of Health and Medical Care 7th edition
Chapter 4
Multiple Choice
1. In the demand model, the endogenous variable is:
A) Income
B) Price
C) Tastes and preferences
D) Prices of other related goods and services
Ans: B
Complexity:
Ahead:
Subject: Chapter 4
2. Measures of ability to purchase healthcare services include:
A) An individual’s earnings in a specific time period
B) An individual’s level of wealth
C) An individual’s after-tax income
D) A and C only
E) A, B, and C
Ans: E
Complexity:
Ahead:
Subject: Chapter 4
3. The change in total utility resulting from a unit change in the consumption of a good or service is called
A) Absolute utility
B) Diminishing marginal utility
C) Marginal utility
D) None of the above
Ans: C
Complexity:
Ahead:
Subject: Chapter 4
4. If the price of a physician visit is $75, and individual A’s own demand for visits is 10 visits, individual B’s own demand for visits is 12 visits, individual A demands 4 visits for individual B, and individual C demands 2 visits for Individual A, what is the social demand for physician visits?
A) 28 visits
B) 26 visits
C) 22 visits
D) 20 visits
Ans: A
Complexity:
Ahead:
Subject: Chapter 4
5. Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate arc price elasticity of demand?
A) -3.7
B) -0.9
C) -1.4
D) -1.1
Ans: D
Complexity:
Ahead:
Subject: Chapter 4
True/False
1. A model is a complete description of reality.
Ans: False
Complexity:
Ahead:
Subject: Chapter 4
2. The present value of a benefit of $10,000 that occurred in 4 years, discounted at a rate of 8% would be $6,800.
Ans: False
Complexity:
Ahead:
Subject: Chapter 4
3. An outward shift in demand is called an increase in demanD)
Ans: True
Complexity:
Ahead:
Subject: Chapter 4
4. A complementary good or service is one whose use is generally accompanied by the use of the good or service in question
Ans: True
Complexity:
Ahead:
Subject: Chapter 4
5. A horizontal demand curve reflects the condition that individuals will still demand and pay for the same quantity of healthcare services as prices increasE)
Ans: False
Complexity:
Ahead:
Subject: Chapter 4
6. For a normal good, there is a direct relationship between price and quantity demand)
Ans: False
Complexity:
Ahead:
Subject: Chapter 4
7. Price elasticity of demand is designed to measure the responsiveness of demand to a price change at a given point or between two given points on a single demand curvE)
Ans: True
Complexity:
Ahead:
Subject: Chapter 4
Short Answer
1. What are the two main roles that physicians have in the healthcare industry?
Ans: 1)To act in an advisory capacity and inform patients of their level of health and the activities and treatments that might improve their health, and 2) To undertake treatments upon which their patients have decided)
Complexity:
Ahead:
Subject: Chapter 4
