MHA 710 - Healthcare Economics - Exam
3 Questions and Answers Graded A+
In order to be a successful price discriminator, a provider must have a degree of
market power (depicted by a downward-sloping demand curve) and meet what
other condition(s)?
a. Customers cannot know that different prices are being charged.
b. Markets must be segmentable, identifying differences in ability to pay.
c. Demand for services must be relatively price elastic.
d. Profitable service expansion opportunities must be limited.
e. The provider must have excess capacity to accommodate the extra business. -
Correct answer-b. Markets must be segmentable, identifying differences in ability
to pay.
Legislation considered by Congress to restrict legal immigration would:
a. surprise many policymakers because Congress finds it difficult to agree on much
of anything regarding immigration.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,b. improve employment prospects for native-born Americans.
c. have little effect on medical markets, as so few physicians practicing medicine in
the United States are foreigners.
d. raise the costs of operating in many of the nation's rural and inner-city hospitals.
e. allow more Americans trained abroad to compete for openings in United States'
residency programs. - Correct answer-d. raise the costs of operating in many of the
nation's rural and inner-city hospitals.
Physicians who own their own diagnostic testing facilities tend to order more tests,
charge higher fees for them, and have higher total bills to patients. This practice of
self-referral is an example of:
a. cognitive dissonance.
b. physician-induced demand.
c. moral hazard.
d. adverse selection.
e. res ipsa loquitur. - Correct answer-b. physician-induced demand.
Which of the following statements is true concerning the trend in community
hospital care between inpatient and outpatient services since the mid-1980s?
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,a. Both inpatient and outpatient services have been declining.
b. There has been no noticeable trend in either inpatient or outpatient services.
c. Both inpatient and outpatient services have been growing.
d. Outpatient services have been growing, while inpatient services have been
declining.
e. Outpatient services have been declining, while inpatient services have been
growing. - Correct answer-d. Outpatient services have been growing, while
inpatient services have been declining.
The amount that Medicare pays a hospital for treating a Medicare patient is
determined:
a. at the point when the diagnosis is made.
b. at the time of admission to the hospital.
c. before the patient sees a physician.
d. after the hospital bill is reviewed by Medicare auditors.
e. after medical services are provided. - Correct answer-a. at the point when the
diagnosis is made.
Compared to the not-for-profit organizational form, the for-profit environment
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, a. allows for the transfer of assets.
b. lacks a profit motive.
c. gives shareholders higher returns on their investment
d. provides patients with higher quality of care.
e. does not provide charity care. - Correct answer-a. allows for the transfer of
assets.
What is the most significant cost of attending medical school?
a. Books and incidentals
b. Room and board
c. Tuition and fees
d. The income foregone - Correct answer-d. The income foregone
Using the physician-control model to explain hospital behavior leads to which of
the following conclusions?
a. Other medical inputs tend to be overused to maximize physicians' productivity.
b. All investment decisions will be based on optimal resource use.
c. The use of operating rooms will be maximized with little excess capacity.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
3 Questions and Answers Graded A+
In order to be a successful price discriminator, a provider must have a degree of
market power (depicted by a downward-sloping demand curve) and meet what
other condition(s)?
a. Customers cannot know that different prices are being charged.
b. Markets must be segmentable, identifying differences in ability to pay.
c. Demand for services must be relatively price elastic.
d. Profitable service expansion opportunities must be limited.
e. The provider must have excess capacity to accommodate the extra business. -
Correct answer-b. Markets must be segmentable, identifying differences in ability
to pay.
Legislation considered by Congress to restrict legal immigration would:
a. surprise many policymakers because Congress finds it difficult to agree on much
of anything regarding immigration.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,b. improve employment prospects for native-born Americans.
c. have little effect on medical markets, as so few physicians practicing medicine in
the United States are foreigners.
d. raise the costs of operating in many of the nation's rural and inner-city hospitals.
e. allow more Americans trained abroad to compete for openings in United States'
residency programs. - Correct answer-d. raise the costs of operating in many of the
nation's rural and inner-city hospitals.
Physicians who own their own diagnostic testing facilities tend to order more tests,
charge higher fees for them, and have higher total bills to patients. This practice of
self-referral is an example of:
a. cognitive dissonance.
b. physician-induced demand.
c. moral hazard.
d. adverse selection.
e. res ipsa loquitur. - Correct answer-b. physician-induced demand.
Which of the following statements is true concerning the trend in community
hospital care between inpatient and outpatient services since the mid-1980s?
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,a. Both inpatient and outpatient services have been declining.
b. There has been no noticeable trend in either inpatient or outpatient services.
c. Both inpatient and outpatient services have been growing.
d. Outpatient services have been growing, while inpatient services have been
declining.
e. Outpatient services have been declining, while inpatient services have been
growing. - Correct answer-d. Outpatient services have been growing, while
inpatient services have been declining.
The amount that Medicare pays a hospital for treating a Medicare patient is
determined:
a. at the point when the diagnosis is made.
b. at the time of admission to the hospital.
c. before the patient sees a physician.
d. after the hospital bill is reviewed by Medicare auditors.
e. after medical services are provided. - Correct answer-a. at the point when the
diagnosis is made.
Compared to the not-for-profit organizational form, the for-profit environment
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, a. allows for the transfer of assets.
b. lacks a profit motive.
c. gives shareholders higher returns on their investment
d. provides patients with higher quality of care.
e. does not provide charity care. - Correct answer-a. allows for the transfer of
assets.
What is the most significant cost of attending medical school?
a. Books and incidentals
b. Room and board
c. Tuition and fees
d. The income foregone - Correct answer-d. The income foregone
Using the physician-control model to explain hospital behavior leads to which of
the following conclusions?
a. Other medical inputs tend to be overused to maximize physicians' productivity.
b. All investment decisions will be based on optimal resource use.
c. The use of operating rooms will be maximized with little excess capacity.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
