Page 1 of 25
19 May 2026
MHA 710 - Healthcare Economics Exam 1 | 130
Questions with 100% Correct Answers | Verified |
Latest Update 2026
The merger of two community hospitals located in the same geographic market is called
a. vertical integration.
b. horizontal integration.
c. a leveraged buyout.
d. a conglomerate merger.
e. a real shame, since one of the hospitals will likely close. - CORRECT ANSWER-b. horizontal
integration.
Economies of scale exist when
a. long-run average costs decline as output increases.
b. long-run average costs are constant.
c. long-run average costs increase as output increases.
d. short-run average costs decline.
e. short-run average costs increase. - CORRECT ANSWER-a. long-run average costs decline as
output increases.
Horizontal integration allows firms to do all of the following except
a. take advantage of cost savings due to economies of scale.
b. reduce administrative costs.
c. create brand identity.
d. fully integrate with primary care clinics and acute care nursing facilities. - CORRECT ANSWER-d.
fully integrate with primary care clinics and acute care nursing facilities.
Consolidation activity in the hospital industry
a. has slowed due to government regulations.
b. has created a large number of nationwide for-profit hospital chains.
c. has occurred almost exclusively at the local level.
d. occurs for same reasons that cause consolidation in other industries. - CORRECT ANSWER-d.
occurs for same reasons that cause consolidation in other industries.
, Page 2 of 25
19 May 2026
What is the most important factor leading to rising health care costs in the United States since
1980?
a. The increased use of expensive medical technology
b. The aging U.S. population
c. The increased cost of malpractice insurance for providers
d. Rising incomes for physicians
e. The rising cost of pharmaceutical drugs - CORRECT ANSWER-a. The increased use of expensive
medical technology
Rent-seeking behavior results in
a. increased economic activity by promoting efficiency.
b. lower economic activity by diverting resource to less-productive uses.
c. a more equitable distribution of income and wealth.
d. lower prices throughout the economy.
e. greater income and wealth in the private sector. - CORRECT ANSWER-b. lower economic activity
by diverting resource to less-productive uses.
Of the new drugs introduced in the United States between 1940 and 1990, what percentage were
discovered by U.S. firms?
a. 15 percent
b. 30 percent
c. 45 percent
d. 60 percent
e. 75 percent - CORRECT ANSWER-d. 60 percent
Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in
a. normal profits on the patented drug.
b. monopoly status in the production of the drug.
c. lower prices for patients requiring the drug.
d. orphan drug status.
, Page 3 of 25
19 May 2026
e. fewer new chemical compounds discovered. - CORRECT ANSWER-b. monopoly status in the
production of the drug.
The regulatory agency with oversight responsibility for the pharmaceutical industry is the
a. IRS.
b. FDA.
c. SEC.
d. ITC.
e. ATT. - CORRECT ANSWER-b. FDA.
One of the primary reasons that costly technology is being introduced into the health care system
is that
a. research scientists have successfully mapped the human genome.
b. high cost is synonymous with better outcomes.
c. third-party insurance finances most of the cost of care.
d. all of the above. - CORRECT ANSWER-c. third-party insurance finances most of the cost of care.
The fastest-growing segment of pharmaceutical marketing is:
a. marketing to physicians.
b. marketing to nurse practitioners.
c. marketing to the consumer.
d. none of the above. - CORRECT ANSWER-c. marketing to the consumer.
Medicare and Medicaid were enacted by the Johnson administration in 1965 as amendments to
which federal law already in existence?
a. Welfare Act of 1960
b. Social Security Act
c. Employee Retirement and Income Security Act
d. Managed Care Act
e. Equal Rights Act - CORRECT ANSWER-b. Social Security Act
The only disease-specific group eligible for Medicare are those suffering from
19 May 2026
MHA 710 - Healthcare Economics Exam 1 | 130
Questions with 100% Correct Answers | Verified |
Latest Update 2026
The merger of two community hospitals located in the same geographic market is called
a. vertical integration.
b. horizontal integration.
c. a leveraged buyout.
d. a conglomerate merger.
e. a real shame, since one of the hospitals will likely close. - CORRECT ANSWER-b. horizontal
integration.
Economies of scale exist when
a. long-run average costs decline as output increases.
b. long-run average costs are constant.
c. long-run average costs increase as output increases.
d. short-run average costs decline.
e. short-run average costs increase. - CORRECT ANSWER-a. long-run average costs decline as
output increases.
Horizontal integration allows firms to do all of the following except
a. take advantage of cost savings due to economies of scale.
b. reduce administrative costs.
c. create brand identity.
d. fully integrate with primary care clinics and acute care nursing facilities. - CORRECT ANSWER-d.
fully integrate with primary care clinics and acute care nursing facilities.
Consolidation activity in the hospital industry
a. has slowed due to government regulations.
b. has created a large number of nationwide for-profit hospital chains.
c. has occurred almost exclusively at the local level.
d. occurs for same reasons that cause consolidation in other industries. - CORRECT ANSWER-d.
occurs for same reasons that cause consolidation in other industries.
, Page 2 of 25
19 May 2026
What is the most important factor leading to rising health care costs in the United States since
1980?
a. The increased use of expensive medical technology
b. The aging U.S. population
c. The increased cost of malpractice insurance for providers
d. Rising incomes for physicians
e. The rising cost of pharmaceutical drugs - CORRECT ANSWER-a. The increased use of expensive
medical technology
Rent-seeking behavior results in
a. increased economic activity by promoting efficiency.
b. lower economic activity by diverting resource to less-productive uses.
c. a more equitable distribution of income and wealth.
d. lower prices throughout the economy.
e. greater income and wealth in the private sector. - CORRECT ANSWER-b. lower economic activity
by diverting resource to less-productive uses.
Of the new drugs introduced in the United States between 1940 and 1990, what percentage were
discovered by U.S. firms?
a. 15 percent
b. 30 percent
c. 45 percent
d. 60 percent
e. 75 percent - CORRECT ANSWER-d. 60 percent
Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in
a. normal profits on the patented drug.
b. monopoly status in the production of the drug.
c. lower prices for patients requiring the drug.
d. orphan drug status.
, Page 3 of 25
19 May 2026
e. fewer new chemical compounds discovered. - CORRECT ANSWER-b. monopoly status in the
production of the drug.
The regulatory agency with oversight responsibility for the pharmaceutical industry is the
a. IRS.
b. FDA.
c. SEC.
d. ITC.
e. ATT. - CORRECT ANSWER-b. FDA.
One of the primary reasons that costly technology is being introduced into the health care system
is that
a. research scientists have successfully mapped the human genome.
b. high cost is synonymous with better outcomes.
c. third-party insurance finances most of the cost of care.
d. all of the above. - CORRECT ANSWER-c. third-party insurance finances most of the cost of care.
The fastest-growing segment of pharmaceutical marketing is:
a. marketing to physicians.
b. marketing to nurse practitioners.
c. marketing to the consumer.
d. none of the above. - CORRECT ANSWER-c. marketing to the consumer.
Medicare and Medicaid were enacted by the Johnson administration in 1965 as amendments to
which federal law already in existence?
a. Welfare Act of 1960
b. Social Security Act
c. Employee Retirement and Income Security Act
d. Managed Care Act
e. Equal Rights Act - CORRECT ANSWER-b. Social Security Act
The only disease-specific group eligible for Medicare are those suffering from
