Suppose in a given country that the expected life span is 70 years.

Question # 00387961 Posted By: katetutor Updated on: 09/16/2016 06:50 AM Due on: 09/16/2016
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Question 1 of 20 5.0 Points

Suppose in a given country that the expected life span is 70 years. Health policy-makers increase health care spending by 10 percent and the life span rises to 71 years. The elasticity of life span with respect to health care spending is:

A. 0

B. + 4/7

C. +1/7

D. +1

Question 2 of 20 5.0 Points

If a $100 billion increase in funding for health care increases average life years by 0.76 life years: ?

A. it is a poor investment.

B. it may be a good investment, depending on the alternative uses of the funds.

C. it is a good investment only if it helps the poor.

D. the funds would be better spent on schooling.

Question 3 of 20 5.0 Points

If the coinsurance rate increases from 0.10 to 0.15, this raises the effective money price by __________ percent. ?

A. 0.05

B. 5

C. 25

D. 50

Question 4 of 20 5.0 Points

Assume that a machine has a useful life of 8 years, and it loses its value in a “straight line” (i.e. one-eight of the original value per year). At a 10% interest rate, and including depreciation in the calculation, over a two-year period a $100,000 investment must earn at least approximately __________ to be economically viable.

A. $20,000

B. $30,000

C. $40,000

D. $50,000

Question 5 of 20 5.0 Points

In the accompanying diagram (above), George:

A. will purchase a limited amount of insurance to avoid some risk.

B. will not purchase insurance, because the utility function pictured

indicates a decreasing marginal utility of wealth.

C. will not purchase insurance, because the utility function pictured

indicates a constant marginal utility of wealth.

D. will not purchase insurance, because the utility function pictured

indicates an increasing marginal utility of wealth.

Question 6 of 20 5.0 Points

Economists are finding social capital to be an important determinant of health. Which of the following forms of capital would NOT be considered a form of social capital?

A. Exercising by oneself at the health club

B. Hanging around with classroom peers

C. Belonging to a church group

D. Working on a neighborhood crime patrol

Question 7 of 20 5.0 Points

At a 6% interest rate, ignoring depreciation, over a three year period a $100,000 investment must earn at least __________ to be economically viable.

A. $7,000

B. $19,000

C. $31,000

D. $56,000

Question 8 of 20 5.0 Points

Suppose that cost per day of treatment rises by 4% in a given year. If the quality of treatment per day rises by 5%, then cost per quality adjusted day has:

A. risen by 9%.

B. risen by 1%.

C. fallen by 1%.

D. fallen by 20%.

Question 9 of 20 5.0 Points

Fractional coinsurance __________ the price elasticity of demand by __________ the out-of-pocket cost.

A. increases; decreasing

B. decreases; increasing

C. increases; decreasing

D. decreases; decreasing

Question 10 of 20 5.0 Points

At __________ interest rates, the opportunity cost of capital __________. ?

A. lower; increases

B. higher; increases

C. zero; is zero

D. zero; is infinite

Question 11 of 20 5.0 Points

As people age, their optimal health stock __________ because __________.

A. increases; people are ill more often

B. increases; people are using more care

C. decreases; cost of capital increases and remaining life span decreases

D. decreases; cost of capital decreases and remaining life span increases

Question 12 of 20 5.0 Points

For an entire economy the optimal coinsurance rate balances the marginal gain from increased protection against risk against the marginal loss from increased moral hazard. Manning and Marquis find this optimal rate to be approximately __________ percent.

A. 10

B. 25

C. 45

D. 60

Question 13 of 20 5.0 Points

Refer to the figure above. An isoquant that illustrates substitution possibilities between nurses and physicians is represented by panel:

A. A.

B. B.

C. C.

D. B and C.

Question 14 of 20 5.0 Points

Education may be an important determinant of health care demand because:

A. better education means that people know which goods are better or worse for them.

B. people must buy less health care in order to get more education.

C. people must earn more money to get more health care.

D. people must know to avoid illegal drugs.

Question 15 of 20 5.0 Points

Suppose that the demand for labor is summarized by the equation:

wD = 40 – 10 LD.

The supply of labor is summarized by the equation:

wS = 10 + 5 LS.

The equilibrium wage is __________ and the equilibrium labor force is __________.

A. $5; 4

B. $10; 3

C. $15; 3

D. $20; 2

Question 16 of 20 5.0 Points

Hospital A does emergency care only and has total costs of $1,000,000 for output of 100 patients per day. Hospital B does surgery only and has total costs of $10,000,000 for 100 surgeries per day. Hospital C does both emergency care (100 patients per day) and surgeries (100 per day) with total costs of $10,500,000. We can say that:

A. Hospital A has economies of scale.

B. Hospital B has economies of scale.

C. Hospital C has economies of scale.

D. Hospital C has economies of scope.

Question 17 of 20 5.0 Points

A BMI equal to 32 indicates that the individual is:

A. underweight.

B. normal weight.

C. overweight.

D. obese.

Question 18 of 20 5.0 Points

Consider the following hypothetical table of benefits and costs for health production for the people in the society.

Age Total Benefits (in $) Total Costs (in $)

75 100 10

76 120 12

77 138 15

78 154 19

79 168 25

80 182 33

81 194 43

82 204 55

83 212 75

84 218 105

85 222 150

In the table above, policy-makers should spend __________ because __________. ?

A. $10; it is the least cost solution

B. $43; past this level, marginal costs exceed marginal benefits

C. $150; it maximizes total benefits

D. $110: it maximizes total benefits

Question 19 of 20 5.0 Points

Calculate the expected return in a game where Sam wins $1 with the probability of , $5 with the probability of , and $0 with the probability of . ?

A. $0.

B. $ 1 1/6.

C. $ 2 1/6 .

D. $3.

Question 20 of 20 5.0 Points

Inputs Health Status Marginal Product Average Product

1 20 20 20

2 28 ___ 14

3 33 5 11

4 36 3 ___

5 36 0 7.2

In the chart above, the marginal product of the second unit of the health care input is __________ units of health status. ?

A. 7

B. 8

C. 20

D. 28

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