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Multiple Choice Answers


Question 1
1. One of the peculiarities of the U.S. market for health care is:
A. Third-party payments by insurance companies
B. Government-provided health insurance
C. Government tax credits and vouchers for consumers to pay for health care
D. Fee-for-service payments for all physician visits

Question 2
1. Studies in industrially advanced nations indicate that a 3 percent increase in incomes will generate a:
A. 1 percent increase in the demand for health care
B. 2 percent increase in the demand for health care
C. 3 percent increase in the demand for health care
D. 4 percent increase in the demand for health care

Question 3
The number of Americans who do not have health care coverage is approximately:
A. 12 million
B. 45 million
C. 85 million
D. 121 million

Question 4
Private and public insurance pays for about what percentage of health care expenditures?
A. 25 percent
B. 61 percent
C. 80 percent
D. 92 percent

Question 5
What health care program provides payment for medical benefits to certain low-income people, including the blind, the elderly, persons with disabilities, children, and adults with dependent children?
A. Medicaid
B. Medicare
C. HMOs
D. PPOs

Question 6
Health care spending absorbed about what percentage of GDP?
A. 4 percent
B. 16 percent
C. 21 percent
D. 35 percent

Question 7
Which would be the best example of a positive externality in the medical care market?
A. Fee-for-service
B. Immunizations
C. Health alliances
D. Copayments

Question 8
The price elasticity of demand for health care is:
A) perfectly inelastic.
B) relatively inelastic.
C) relatively elastic.
D) perfectly elastic.

Question 9
If labor productivity in the health care industry rises very slowly relative to wages and salaries in the industry, this would tend to:
A) increase the demand for health care.
B) decrease the demand for health care.
C) increase the supply of health care.
D) decrease the supply of health care.

Question 10

Refer to the attached diagram. Economists would argue that health care should be provided to patients in:
A) some amount less than Q1.
B) amount Q1.
C) some amount between Q1 and Q2.
D) amount Q2.

QUESTION 11
Refer to the attached diagram. Physicians likely would argue that health care should be provided to patients in:
same graph as last question
A) some amount less than Q1.
B) amount Q1.
C) some amount between Q1 and Q2.
D) amount Q2

Question 12

The availability of health insurance tends to:
A) decrease the demand for health care and cause an under allocation of resources to the health care industry.
B) increase the quantity of health care demanded and cause an under allocation of resources to the health care industry.
C) increase the quantity of health care demanded and cause an over allocation of resources to the health care industry.
D) decrease the quantity of health care demanded and cause an over allocation of resources to the health care industry.

Question 13
Q Supplied
Price
Q Demanded
12,000
$5,000
2,000
10,000
4,000
4,000
7,000
3,000
7,000
4,000
2,000
11,000
1,000
1,000
16,000
Refer to the above supply and demand data for a certain elective surgical procedure. Without health insurance, the equilibrium price and quantity would be:
A) $5,000 and 2,000.
B) $4,000 and 4,000.
 C) $3,000 and 7,000.
D) $2,000 and 11,000.

Question 14
Q Supplied
Price
Q Demanded
12,000
$5,000
2,000
10,000
4,000
4,000
7,000
3,000
7,000
4,000
2,000
11,000
1,000
1,000
16,000
Refer to the above supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays 50 percent of the remaining equilibrium price after a $1000 deductible is satisfied, the quantity of health care consumed will be:
A) 4,000.
B) 7,000.
C) 11,000.
D) 16,000.

Question 15
Preferred provider organizations (PPOs):
A) charge a fixed amount per member, hire many of their own physicians, and provide health services only to members.
B) require that their members give up the right to file medical malpractice suits.
C) are illegal in several states.
D) require physicians and hospitals to provide discounted prices for their services as a condition for being included in the insurance plan.

Question 16
One of the main difference between PPOs and HMOs is that:
A) HMO physicians charge on a traditional fee-for-service basis, while PPO physicians do not
B) HMOs are usually for-profit organizations, whereas PPOs are not.
C) PPOs employ their own doctors, whereas HMOs do not.
D) PPO physicians charge on a traditional fee-for service basis, while HMOs do not.

Question 17

Health Savings Accounts (HSAs) implemented by the 2003 Medicare law:
A) are only available to those enrolled in Medicare.
B) allow workers to accumulate untaxed dollars for payment of qualified medical expenses.
C) are criticized because they require workers to “use it or lose it” each year; workers are not allowed to accumulate balances over time.
D) can only be used to pay for prescription drugs.

Question 18
1. Major criticisms against the Patient Protection and Affordable Care Act (PPACA) include the following arguments, except:
A. It would lead to greater inefficiencies in health care, and overconsumption might even increase
B. It is very costly, and the revenue sources cited in the Act would not be sufficient to cover future expenses
C. It still does not cover everyone in the nation, and there will still be significant numbers of Americans left uninsured
D. It might be the first step towards a socialized health insurance system where market forces will have no role in rationing health care

Question 19
In 2004, the greatest number of immigrants arriving in the United States came from:
A) India and Brazil.
B) the Dominican Republic and Cuba.
C) China and Vietnam.
D) Mexico and India.

Question 20
If the elasticity of demand for labor in the United States is unitary, immigration into the United States can be expected to:
A) increase the average U.S. wage rate.
B) decrease the total amount of wage earnings that U.S. workers receive.
C) increase the total amount of wage earnings that U.S. workers receive.
D) leave the total amount of wage earnings that U.S. workers receive unchanged.

Question 21

Voluntary migration of skilled craft workers from low-paying to high-paying nations is most likely to be opposed by:
A) business groups in the high-paying nations.
B) craft workers who stay in the low-paying nations.
C) industrial unions in the high-paying nations.
D) craft unions in the high-paying nations.

Question 22
The marginal cost-marginal benefit approach to migration suggests that:
A) the optimal amount of immigration to the United States is probably zero.
B) everyone who wishes to come to the United States should be allowed to do so.
C) a particular level of immigration may be too low or too high.
D) efforts to reduce the inflow of illegal immigrants should be abandoned.

Question 23
Refer to the attached graph. (Assume that the pre-migration labor force in Country A is 100 and that it is 150 in country B.) The migration of labor will:
A. Increase domestic output in both countries
B. Decrease domestic output in both countries
C. Increase domestic output in country A and decrease domestic output
D. Decrease domestic output in country A and increase domestic output in country B

Question 24

Refer to the attached graph. (Assume that the pr-emigration labor force in Country A is 100 and that it is 150 in country B.) Domestic output in country A will, after the immigration:
same graph as question 2
A. Decrease by $50M
B. Decrease by $150M
C. Increase by $50M
D. Increase by $150M

Question 25
1. Which of the following is an explicit cost of migration?
A. Wages workers give up when they leave their home country
B. Adapting to a new culture
C. Paying application fees
D. The stress of looking for a job in a new country

Question 26
Suppose that Rosa is considering migration to another country. To move, she will have to spend $5000 on transportation and $4000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa's explicit cost of migrating is: A. $9,000
B. $500,000
C. $507,000
D. $5,000

Question 27
The outflow of highly-educated workers from low-income countries to high-income countries is called:
A. backflow
B. self-selection
C. skill transferability
D. brain drain

Question 28

Other things equal
A. owners of U.S. businesses benefit from immigration and owners of Mexican businesses are hurt by emigration
B. owners of U.S. businesses are hurt by immigration and owners of Mexican businesses benefit emigration
C. owners of U.S. businesses benefit from emigration and owners of Mexican businesses are hurt by immigration
D. the benefit owners of U.S. businesses receive from immigration is offset by the losses experienced by owners of Mexican businesses due to emigration

Question 29
A nation can maximize the net benefits from immigration by:
A. Contracting immigration until the extra welfare cost for taxpayers is zero
B. Expanding immigration until its marginal benefits equal its marginal costs
C. Expanding immigration because it benefits society with a greater supply of products and increased demand for them
D. Contracting immigration because the benefits are minor and it reduces the wage rates of domestic workers

Question 30
Illegal immigrants make up about what percent of all agricultural workers?
A. 12%
B. 14%
C. 17%
D. 24%

Question 31

1. What portion of the engineering and computer-science doctorate degree-holders in the U.S. are foreign-born?
A. About 10%
B. About 25%
C. About 50%
D. About 75%

Question 32
1. If immigration increases the productivity of domestic workers, then it:
A. Decreases the return on capital
B. Means that immigrant workers and domestic workers are substitutes
C. Means that immigrant workers are entering low-wage occupations
D. Increases the return on capital

Question 33

As a result of a major overhaul of the U.S. welfare system in 1996:
A. Benefits were expanded for immigrants
B. Immigrants are denied benefits for their first five years in the U.S.
C. Immigrants are denied benefits for their first three years in the U.S.
D. More immigrants qualified for welfare benefits

Question 34
Diversity immigration slots are filled through an annual lottery because the applications by diversity immigrants exceed the current quota for diversity immigrants.
True
False

Question 35
Mexican workers who have migrated to the United States and make remittances to their families in Mexico decrease the gain to domestic output in the United States and increase it in Mexico.
True
False