LSUS MHA 710 ECONOMICS 1 ACTUAL
EXAM PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
◍ Suppose you must rely exclusively on cost-effectiveness analysis (CEA) to
determine whether a category of people receives an expensive, potentially
life-saving, intervention. Which of the following considerations must you
keep in mind when making your decision?.
Answer: CEA ignores the possibility that certain unidentified individuals in
a group may have a greater than normal positive response to the treatment
◍ Suppose your assignment is to use the standard time trade-off approach to
measure quality of life. You are given the following information: An
individual is faced with living the remaining 10 years of their life suffering
from severe osteoporosis. The individual reveals that they would be willing
to give up four of those years to live the remaining six in perfect health.
What is the utility of one year in a chronic health state relative to perfect
health?.
Answer: 0.6
◍ Opportunity cost is a measure of.
Answer: foregone opportunities and value based on the alternative not
chosen.
◍ The concept of quality-adjusted life year (QALY):.
Answer: is used extensively to evaluate medical care resource allocation
within government-run programs on fixed budgets, especially in Europe.
◍ The accompanying diagram depicts the relationship between health status
and medical care spending for a particular country. Assume the current
spending level is S on TP . All of the statements below are true?.
, Answer: S1 levels of spending are often described as spending on the flat of
the curve.
◍ There are substantial differences in medical care use by demographic
characteristics such as age, sex, and marital status. Which of the following
statements is true?.
Answer: Adult women spend more money on medical care than men do.
◍ The opportunity cost of investing in a new lithotripter (a machine that
pulverizes kidney stones with sound waves) is.
Answer: defined by the next best use of the money invested in the
equipment.
◍ A physician's ability to induce demand is greatly enhanced when:.
Answer: patients have difficulty gathering and processing information.
◍ What percentage of Americans considered the complete repeal of the Patient
Protection And Affordable Care Act of 2010 a good thing?.
Answer: 40 percent
◍ According to Grossman (1972), how is the demand for medical care
determined?.
Answer: It is derived from the demand for health.
◍ By 2020, what was the forecasted percentage amount of health care
spending paid by individuals?.
Answer: 10.4 percent
◍ The intangible costs associated with reduced quality of life include:.
Answer: pain and suffering.
◍ The "invisible hand" using Adam Smith's terminology refers to.
Answer: market forces working through the price mechanism.
◍ The primary tasks required to conduct a successful cost effectiveness study
are all of the following except:.
Answer: identifying the overall cost of a health condition on society.
◍ According to recent public opinion polls, what percentage of Americans are
, satisfied with the quality of the medical care they receive?.
Answer: 70 percent
◍ According to economic theory what is the optimal percentage of GDP to be
spent on medical care?.
Answer: There is no widely accepted way to determine the optimal
percentage.
◍ Under which of the following circumstances is the principal-agent
relationship likely to be most problematic?.
Answer: Between surgeons and patients
◍ Which of the following would likely lead to the greatest improvement in the
health status of the population in the United States?.
Answer: Improved lifestyles changes
◍ Which of the following statements is based on positive analysis?.
Answer: Individuals without health insurance have less access to physicians'
services than those who have health insurance and The high cost of health
insurance places U.S. firms at a competitive disadvantage with their foreign
competitors.
◍ Many economists consider medical care a superior good. Which of the
following statements is true regarding a superior good?.
Answer: As consumer income increases, consumers spend more on superior
goods.
◍ Public option.
Answer: A public health insurance plan comparable to Medicaid, designed
to compete with private insurance.
◍ Uncertainty.
Answer: A state in which multiple outcomes are possible but the likelihood
of any one outcome is not known.
◍ When measuring the effectiveness of a treatment, surrogate measures reflect
clinical efficacy and include:.
, Answer: bone-mass density (BMD).
◍ Which of the following is least responsible for the reduction in mortality
rates in Europe and North America?.
Answer: More effective medical interventions
◍ Researchers use cost-of-illness studies for all of the following except to:.
Answer: compare the relative efficiency of treating various conditions.
◍ Premium.
Answer: A periodic payment required to purchase an insurance policy.
◍ The standard cut-off for cost per quality-adjusted life year (QALY) used by
most governmental decision makers is set in terms of a multiple of national
per capita income. The value of the threshold is usually what percent of
national per capita income?.
Answer: 100
◍ Group insurance.
Answer: A plan whereby an entire group receives insurance under a single
policy. The insurance is actually issued to the plan holder, usually an
employer or association.
◍ Medicare.
Answer: Health insurance for the elderly provided under an amendment to
the Social Security Act.
◍ When area income increases by 20 percent, what occurs?.
Answer: quantity demanded rises by 10.0 percent.
◍ Medicaid.
Answer: Health insurance for the poor financed jointly by federal and state
governments.
◍ Flexner Report.
Answer: A 1910 report published as part of a critical review of medical
education in the United States. The response of the medical establishment
led to significant changes in the accreditation procedures of medical schools
EXAM PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
◍ Suppose you must rely exclusively on cost-effectiveness analysis (CEA) to
determine whether a category of people receives an expensive, potentially
life-saving, intervention. Which of the following considerations must you
keep in mind when making your decision?.
Answer: CEA ignores the possibility that certain unidentified individuals in
a group may have a greater than normal positive response to the treatment
◍ Suppose your assignment is to use the standard time trade-off approach to
measure quality of life. You are given the following information: An
individual is faced with living the remaining 10 years of their life suffering
from severe osteoporosis. The individual reveals that they would be willing
to give up four of those years to live the remaining six in perfect health.
What is the utility of one year in a chronic health state relative to perfect
health?.
Answer: 0.6
◍ Opportunity cost is a measure of.
Answer: foregone opportunities and value based on the alternative not
chosen.
◍ The concept of quality-adjusted life year (QALY):.
Answer: is used extensively to evaluate medical care resource allocation
within government-run programs on fixed budgets, especially in Europe.
◍ The accompanying diagram depicts the relationship between health status
and medical care spending for a particular country. Assume the current
spending level is S on TP . All of the statements below are true?.
, Answer: S1 levels of spending are often described as spending on the flat of
the curve.
◍ There are substantial differences in medical care use by demographic
characteristics such as age, sex, and marital status. Which of the following
statements is true?.
Answer: Adult women spend more money on medical care than men do.
◍ The opportunity cost of investing in a new lithotripter (a machine that
pulverizes kidney stones with sound waves) is.
Answer: defined by the next best use of the money invested in the
equipment.
◍ A physician's ability to induce demand is greatly enhanced when:.
Answer: patients have difficulty gathering and processing information.
◍ What percentage of Americans considered the complete repeal of the Patient
Protection And Affordable Care Act of 2010 a good thing?.
Answer: 40 percent
◍ According to Grossman (1972), how is the demand for medical care
determined?.
Answer: It is derived from the demand for health.
◍ By 2020, what was the forecasted percentage amount of health care
spending paid by individuals?.
Answer: 10.4 percent
◍ The intangible costs associated with reduced quality of life include:.
Answer: pain and suffering.
◍ The "invisible hand" using Adam Smith's terminology refers to.
Answer: market forces working through the price mechanism.
◍ The primary tasks required to conduct a successful cost effectiveness study
are all of the following except:.
Answer: identifying the overall cost of a health condition on society.
◍ According to recent public opinion polls, what percentage of Americans are
, satisfied with the quality of the medical care they receive?.
Answer: 70 percent
◍ According to economic theory what is the optimal percentage of GDP to be
spent on medical care?.
Answer: There is no widely accepted way to determine the optimal
percentage.
◍ Under which of the following circumstances is the principal-agent
relationship likely to be most problematic?.
Answer: Between surgeons and patients
◍ Which of the following would likely lead to the greatest improvement in the
health status of the population in the United States?.
Answer: Improved lifestyles changes
◍ Which of the following statements is based on positive analysis?.
Answer: Individuals without health insurance have less access to physicians'
services than those who have health insurance and The high cost of health
insurance places U.S. firms at a competitive disadvantage with their foreign
competitors.
◍ Many economists consider medical care a superior good. Which of the
following statements is true regarding a superior good?.
Answer: As consumer income increases, consumers spend more on superior
goods.
◍ Public option.
Answer: A public health insurance plan comparable to Medicaid, designed
to compete with private insurance.
◍ Uncertainty.
Answer: A state in which multiple outcomes are possible but the likelihood
of any one outcome is not known.
◍ When measuring the effectiveness of a treatment, surrogate measures reflect
clinical efficacy and include:.
, Answer: bone-mass density (BMD).
◍ Which of the following is least responsible for the reduction in mortality
rates in Europe and North America?.
Answer: More effective medical interventions
◍ Researchers use cost-of-illness studies for all of the following except to:.
Answer: compare the relative efficiency of treating various conditions.
◍ Premium.
Answer: A periodic payment required to purchase an insurance policy.
◍ The standard cut-off for cost per quality-adjusted life year (QALY) used by
most governmental decision makers is set in terms of a multiple of national
per capita income. The value of the threshold is usually what percent of
national per capita income?.
Answer: 100
◍ Group insurance.
Answer: A plan whereby an entire group receives insurance under a single
policy. The insurance is actually issued to the plan holder, usually an
employer or association.
◍ Medicare.
Answer: Health insurance for the elderly provided under an amendment to
the Social Security Act.
◍ When area income increases by 20 percent, what occurs?.
Answer: quantity demanded rises by 10.0 percent.
◍ Medicaid.
Answer: Health insurance for the poor financed jointly by federal and state
governments.
◍ Flexner Report.
Answer: A 1910 report published as part of a critical review of medical
education in the United States. The response of the medical establishment
led to significant changes in the accreditation procedures of medical schools
