MHA710 Exam 1 Actual Exam Style V1 |
MHA 710 Healthcare Economics |
Louisiana State University in Shreveport
1. Which economic concept explains why healthcare resources must be allocated among
competing uses?
A. Perfect competition
B. Equilibrium
C. Surplus
D. Scarcity
Answer: D
Rationale: Scarcity exists because human wants for healthcare services exceed the limited
resources available to produce them. This fundamental problem forces policymakers and
providers to make difficult choices regarding resource allocation. Economics provides the
tools necessary to analyze these trade-offs and improve efficiency.
2. In the context of healthcare economics, what does ‘opportunity cost’ represent?
A. The total monetary cost of a medical procedure
B. The value of the next best alternative foregone when a choice is made
C. The out-of-pocket expense for a patient
D. The profit margin of a hospital
,Answer: B
Rationale: Opportunity cost refers to the benefits an individual or society misses out on
when choosing one alternative over another. For instance, funds spent on a new MRI
machine cannot be used to hire additional nursing staff. Understanding this concept is
crucial for making informed decisions in resource-constrained environments.
3. Which of the following would cause a rightward shift in the demand curve for physician
services?
A. A decrease in the price of physician visits
B. A decrease in the overall population
C. A decrease in the price of a substitute service
D. An increase in consumer income, assuming healthcare is a normal good
Answer: D
Rationale: An increase in income typically allows consumers to purchase more healthcare
services, shifting the demand curve to the right. This shift indicates that at every price
point, a higher quantity of services is demanded. Factors other than price, such as
preferences and income, are responsible for shifting the entire curve.
4. The ‘RAND Health Insurance Experiment’ primarily demonstrated that:
A. Higher cost-sharing increases healthcare quality
B. Free care leads to worse health outcomes for the poor
, C. Insurance coverage has no impact on health outcomes for any group
D. Higher cost-sharing reduces the use of healthcare services
Answer: D
Rationale: The RAND experiment found that patients with higher cost-sharing (higher
deductibles and coinsurance) utilized significantly fewer healthcare services. This
reduction in use applied to both highly effective and less effective care. It remains a
foundational study in understanding how price sensitivity affects medical consumption.
5. What is ‘Moral Hazard’ in the healthcare market?
A. People with higher health risks are more likely to buy insurance
B. Insurance companies refusing to cover pre-existing conditions
C. The tendency for individuals to consume more healthcare because they are insured
D. Physicians providing unnecessary care to increase their income
Answer: C
Rationale: Moral hazard occurs when the presence of insurance lowers the marginal cost
of care to the consumer, leading to increased consumption. Because the patient does not
bear the full cost of the service, they may utilize care that has low marginal benefit. This
phenomenon is a primary reason why insurance companies implement cost-sharing
mechanisms like copayments.
MHA 710 Healthcare Economics |
Louisiana State University in Shreveport
1. Which economic concept explains why healthcare resources must be allocated among
competing uses?
A. Perfect competition
B. Equilibrium
C. Surplus
D. Scarcity
Answer: D
Rationale: Scarcity exists because human wants for healthcare services exceed the limited
resources available to produce them. This fundamental problem forces policymakers and
providers to make difficult choices regarding resource allocation. Economics provides the
tools necessary to analyze these trade-offs and improve efficiency.
2. In the context of healthcare economics, what does ‘opportunity cost’ represent?
A. The total monetary cost of a medical procedure
B. The value of the next best alternative foregone when a choice is made
C. The out-of-pocket expense for a patient
D. The profit margin of a hospital
,Answer: B
Rationale: Opportunity cost refers to the benefits an individual or society misses out on
when choosing one alternative over another. For instance, funds spent on a new MRI
machine cannot be used to hire additional nursing staff. Understanding this concept is
crucial for making informed decisions in resource-constrained environments.
3. Which of the following would cause a rightward shift in the demand curve for physician
services?
A. A decrease in the price of physician visits
B. A decrease in the overall population
C. A decrease in the price of a substitute service
D. An increase in consumer income, assuming healthcare is a normal good
Answer: D
Rationale: An increase in income typically allows consumers to purchase more healthcare
services, shifting the demand curve to the right. This shift indicates that at every price
point, a higher quantity of services is demanded. Factors other than price, such as
preferences and income, are responsible for shifting the entire curve.
4. The ‘RAND Health Insurance Experiment’ primarily demonstrated that:
A. Higher cost-sharing increases healthcare quality
B. Free care leads to worse health outcomes for the poor
, C. Insurance coverage has no impact on health outcomes for any group
D. Higher cost-sharing reduces the use of healthcare services
Answer: D
Rationale: The RAND experiment found that patients with higher cost-sharing (higher
deductibles and coinsurance) utilized significantly fewer healthcare services. This
reduction in use applied to both highly effective and less effective care. It remains a
foundational study in understanding how price sensitivity affects medical consumption.
5. What is ‘Moral Hazard’ in the healthcare market?
A. People with higher health risks are more likely to buy insurance
B. Insurance companies refusing to cover pre-existing conditions
C. The tendency for individuals to consume more healthcare because they are insured
D. Physicians providing unnecessary care to increase their income
Answer: C
Rationale: Moral hazard occurs when the presence of insurance lowers the marginal cost
of care to the consumer, leading to increased consumption. Because the patient does not
bear the full cost of the service, they may utilize care that has low marginal benefit. This
phenomenon is a primary reason why insurance companies implement cost-sharing
mechanisms like copayments.
