ECON 530 EXAM 1 QUESTIONS AND ANSWERS
health economics - CORRECT ANSWER✅✅the application of economic theories, tools, and concepts of
economics as a discipline to the topics of health and healthcare
concerned with issues related to the allocation of scarce resources to improve health, this includes both
resource allocation within the economy to the health sector and within the healthcare system to
different activities and individuals
adverse selection - CORRECT ANSWER✅✅a situation often resulting from asymmetric information in
which individuals are able to purchase insurance at the rates that are below actuarially fair rates plus
loading costs
an event in healthcare whereby one part decides not to reveal the full extent of their risk profile to the
other party
a situation in which individuals of different risk types decide whether or not to buy insurance
an information problem that is a source of market failure: low-risk individuals want insurance, but it is
unavailable to them at a reasonable price
moral hazard - CORRECT ANSWER✅✅the possibility of consumers or providers exploiting a benefit
system unduly to the disadvantages of other consumers, providers, or the financing community as a
whole
supplier-induced demand - CORRECT ANSWER✅✅an insurance term that represents the disincentives
created by insurance for individual to take measures that would reduce the amount of care demanded
in healthcare, it is more commonly used to express the additional quantity of healthcare demanded,
resulting from a decrease in the net price of care attributable to insurance
moral hazard - CORRECT ANSWER✅✅arises where the attitudes and behavior of a person or
organization change once they are covered for potential costs or losses
,asymmetric information - CORRECT ANSWER✅✅situations in which the parties on the opposite sides of
transaction have differing amounts of relevant information
doctors have more knowledge and information about medicine than patients/consumers, the individual
may not be the best judge of his/her own interests, the doctor acts as an agent of the patients demand
health - CORRECT ANSWER✅✅a state either of an individual or of a community
effected by poverty, level of education, food intake, access to clean water and sanitary and housing
conditions
the narrowest concept sees it as a measure of the state of the physical body organs
a broader concept is the ability of the body as a whole to function
WHO health - CORRECT ANSWER✅✅a state of physical, mental, and social well-being and not merely
the absence of disease or infirmity
a more holistic view
sees the health of an individual or community as being concerned not only with physical (and mental)
status, but also with social and economic relationships
broader interventions, including community empowerment and anti-poverty measures, are necessary to
promote health
Health economics - CORRECT ANSWER✅✅is the branch of economics that studies the healthcare
system, attempts to explain the healthcare system so we can better understand it, and recommends
ways to improve the healthcare system and increase its efficiency
, In the market for medical care, patients often rely on physicians for information to make their medical
decisions or allow physicians to make these decisions for them. If the physician is an imperfect agent
and is paid fee-for-service this may result in - CORRECT ANSWER✅✅the physician recommending
unnecessary medical services for financial gain
Which of the factors affect the health of a person?
a. Access to health care
b. Level of education
c. Food intake
d. All of the above - CORRECT ANSWER✅✅All of the above
Since the 1960s, medical care spending has been growing faster than the economy measured by the
gross domestic product (GDP). Many economists believe this rapid growth in medical care spending is a
problem because - CORRECT ANSWER✅✅government must devote a larger share of its budget to
financing medical care, which means it has less money to spend on education, roads, and other public
goods we value
Which is true about the healthcare expenditure across the globe?
a. People living in rich countries are generally healthier. Therefore, they do not spend as much money as
the poorer countries
b. Poorer countries spend more money on healthcare than richer countries
c. More populated countries spend less in healthcare in per capita than less populated countries
d. None of the above - CORRECT ANSWER✅✅More populated countries spend less in healthcare in per
capita than less populated countries
Health economic encompasses - CORRECT ANSWER✅✅supply and demand for health care, allocation
of health care resources, and the determination of health care resources
Joe Smith is a health 24 year old that expects to incur healthcare costs of less than $500 in a typical year.
The annual premium that he must pay for health insurance is $2,000, which is the same premium that
health economics - CORRECT ANSWER✅✅the application of economic theories, tools, and concepts of
economics as a discipline to the topics of health and healthcare
concerned with issues related to the allocation of scarce resources to improve health, this includes both
resource allocation within the economy to the health sector and within the healthcare system to
different activities and individuals
adverse selection - CORRECT ANSWER✅✅a situation often resulting from asymmetric information in
which individuals are able to purchase insurance at the rates that are below actuarially fair rates plus
loading costs
an event in healthcare whereby one part decides not to reveal the full extent of their risk profile to the
other party
a situation in which individuals of different risk types decide whether or not to buy insurance
an information problem that is a source of market failure: low-risk individuals want insurance, but it is
unavailable to them at a reasonable price
moral hazard - CORRECT ANSWER✅✅the possibility of consumers or providers exploiting a benefit
system unduly to the disadvantages of other consumers, providers, or the financing community as a
whole
supplier-induced demand - CORRECT ANSWER✅✅an insurance term that represents the disincentives
created by insurance for individual to take measures that would reduce the amount of care demanded
in healthcare, it is more commonly used to express the additional quantity of healthcare demanded,
resulting from a decrease in the net price of care attributable to insurance
moral hazard - CORRECT ANSWER✅✅arises where the attitudes and behavior of a person or
organization change once they are covered for potential costs or losses
,asymmetric information - CORRECT ANSWER✅✅situations in which the parties on the opposite sides of
transaction have differing amounts of relevant information
doctors have more knowledge and information about medicine than patients/consumers, the individual
may not be the best judge of his/her own interests, the doctor acts as an agent of the patients demand
health - CORRECT ANSWER✅✅a state either of an individual or of a community
effected by poverty, level of education, food intake, access to clean water and sanitary and housing
conditions
the narrowest concept sees it as a measure of the state of the physical body organs
a broader concept is the ability of the body as a whole to function
WHO health - CORRECT ANSWER✅✅a state of physical, mental, and social well-being and not merely
the absence of disease or infirmity
a more holistic view
sees the health of an individual or community as being concerned not only with physical (and mental)
status, but also with social and economic relationships
broader interventions, including community empowerment and anti-poverty measures, are necessary to
promote health
Health economics - CORRECT ANSWER✅✅is the branch of economics that studies the healthcare
system, attempts to explain the healthcare system so we can better understand it, and recommends
ways to improve the healthcare system and increase its efficiency
, In the market for medical care, patients often rely on physicians for information to make their medical
decisions or allow physicians to make these decisions for them. If the physician is an imperfect agent
and is paid fee-for-service this may result in - CORRECT ANSWER✅✅the physician recommending
unnecessary medical services for financial gain
Which of the factors affect the health of a person?
a. Access to health care
b. Level of education
c. Food intake
d. All of the above - CORRECT ANSWER✅✅All of the above
Since the 1960s, medical care spending has been growing faster than the economy measured by the
gross domestic product (GDP). Many economists believe this rapid growth in medical care spending is a
problem because - CORRECT ANSWER✅✅government must devote a larger share of its budget to
financing medical care, which means it has less money to spend on education, roads, and other public
goods we value
Which is true about the healthcare expenditure across the globe?
a. People living in rich countries are generally healthier. Therefore, they do not spend as much money as
the poorer countries
b. Poorer countries spend more money on healthcare than richer countries
c. More populated countries spend less in healthcare in per capita than less populated countries
d. None of the above - CORRECT ANSWER✅✅More populated countries spend less in healthcare in per
capita than less populated countries
Health economic encompasses - CORRECT ANSWER✅✅supply and demand for health care, allocation
of health care resources, and the determination of health care resources
Joe Smith is a health 24 year old that expects to incur healthcare costs of less than $500 in a typical year.
The annual premium that he must pay for health insurance is $2,000, which is the same premium that
