Question

1. Which of the following would you NOT expect to be an effect of a large increase in the number of insured persons.

a.The demand curve for health care shifts to the right.

b.The price of health care increases.

c. Total health care expenditure increases.

d. The quantity of health care used decreases.

2.

The patent on a medication will soon expire. Which of the following would we NOT expect to happen after the patent expires?

a.The price of the medication will decrease.

b.The price of the medication will increase.

c. The market equilibrium quantity will increase.

d.The supply curve for the medication will shift to the right.

3.

Which of the following is NOT an example of a barrier to entry in health care?

a. The high cost of opening a new hospital.

b. That medical doctors require a license to practice.

c. A patent on a new medication.

d. Widespread health care insurance coverage.

4. Which of the following describes derived demand in the context of health care.

a. It is not the patient that determines demand for their own health care, it is their physician.

b. After people pay their insurance premium, they will use more health care to at least derive enough value to get what they paid for their premium back.

c.	It is not health care per se that people demand, it is the improvement in health that they expect to get from the health care.

d.	Typically it is not the patient that determines how much they value health care, it is the insurance company because they decide how much to pay (and so how much it is worth).

5. Which of the possible answers accurately completes this sentence?

Supplier induced demand shifts the _____ curve to the _______

a.	supply; left, which increases the price and total health care expenditure.

b. demand; right, which increases the price and therefore increases total health care expenditure.

c. supply; left, which decreases the price and total health care expenditure.

d. demand; left, which increases the price and therefore increases total health care expenditure.

Answer 1

1. d. The quantity of health care used decreases.
(This is not an effect of a large increase in the number of insured persons.)

2. b.The price of the medication will increase.
(As the patent expires, price of medication will decrease due to increased supply)

3. d. Widespread health care insurance coverage.
(This is not a barrier to entry in health care)

4. c. It is not health care per se that people demand, it is the improvement in health that they expect to get from the health care.
(It is the derived demand through demand for health)

5. b. demand; right, which increases the price and therefore increases total health care expenditure.
(Supply induced demand means demand that is created by supply so demand increases)