HMGT 3320 FINAL EXAM REVIEW FALL 2026
QUESTIONS WITH COMPLETE SOLUTIONS
A market failure occurs when prices in a market are above
marginal costs as a result of monopoly power. (T/F) Correct
Answers True
A public good or service is one that is judged to have value that
an individual or society should have based on some concept of
need. (T/F) Correct Answers False
A stop-loss feature sets a lower limit on the amount the
consumer will have to pay during a specified period of time
(e.g., annually or a lifetime). (T/F) Correct Answers False; it
sets an upper limit
A tax that has a larger relative impact on the incomes of high-
income individuals than on low-income individuals is
considered to be:
A. Indeterminate
B. Progressive
C. Neutral
D. Regressive Correct Answers B. Progressive
Assuming the price of a medical encounter is $1,000 and the
beneficiary has an unmet $500 deductible and 20% coinsurance
rate, the amount the beneficiary will pay is:
$400
$600
$800
$500 Correct Answers $600
, coinsurance: Correct Answers requires the enrollee to pay a
specified percentage of the price of services and the insurer pays
the rest
copayment: Correct Answers requires the enrollee to pay a
fixed amount each time a service is used
DIRECT costs: Correct Answers can be traced to a specific
service, organizational unit, or individual provider/manager
Direct regulation: Correct Answers explicit actions to control
price, quantity, or quality
Forms of market failure: Correct Answers -Monopoly power
-Externalities
-Imperfect information
-Merit Goods
-Public goods or services
Forms of market failure: Externalities Correct Answers (e.g.,
pollution) associated with production or consumption are not
captured in the product's price
Forms of market failure: Imperfect information Correct Answers
leads to inability to make informed decisions (physician/patient)
Forms of market failure: Merit goods Correct Answers have
significant societal value, but are too highly-priced in the market
for optimal consumption (e.g., education-- many cannot afford;
thus gov't provides subsidies such as loans or grants)
QUESTIONS WITH COMPLETE SOLUTIONS
A market failure occurs when prices in a market are above
marginal costs as a result of monopoly power. (T/F) Correct
Answers True
A public good or service is one that is judged to have value that
an individual or society should have based on some concept of
need. (T/F) Correct Answers False
A stop-loss feature sets a lower limit on the amount the
consumer will have to pay during a specified period of time
(e.g., annually or a lifetime). (T/F) Correct Answers False; it
sets an upper limit
A tax that has a larger relative impact on the incomes of high-
income individuals than on low-income individuals is
considered to be:
A. Indeterminate
B. Progressive
C. Neutral
D. Regressive Correct Answers B. Progressive
Assuming the price of a medical encounter is $1,000 and the
beneficiary has an unmet $500 deductible and 20% coinsurance
rate, the amount the beneficiary will pay is:
$400
$600
$800
$500 Correct Answers $600
, coinsurance: Correct Answers requires the enrollee to pay a
specified percentage of the price of services and the insurer pays
the rest
copayment: Correct Answers requires the enrollee to pay a
fixed amount each time a service is used
DIRECT costs: Correct Answers can be traced to a specific
service, organizational unit, or individual provider/manager
Direct regulation: Correct Answers explicit actions to control
price, quantity, or quality
Forms of market failure: Correct Answers -Monopoly power
-Externalities
-Imperfect information
-Merit Goods
-Public goods or services
Forms of market failure: Externalities Correct Answers (e.g.,
pollution) associated with production or consumption are not
captured in the product's price
Forms of market failure: Imperfect information Correct Answers
leads to inability to make informed decisions (physician/patient)
Forms of market failure: Merit goods Correct Answers have
significant societal value, but are too highly-priced in the market
for optimal consumption (e.g., education-- many cannot afford;
thus gov't provides subsidies such as loans or grants)
