MHA710 Exam 4 Actual Exam Style V1
MHA 710 Healthcare Economics |
Louisiana State University in Shreveport
1. In healthcare economics, what does the term ‘Adverse Selection’ primarily refer to?
A. When individuals with higher health risks are more likely to buy insurance.
B. When patients choose low-quality providers due to lack of information.
C. The tendency of doctors to provide more services than necessary.
D. The process of insurance companies selecting the most profitable patients.
Answer: A
Rationale: Adverse selection occurs when there is an imbalance of information between
the buyer and the seller. In insurance markets, this typically means that people who know
they are high-risk are the ones most eager to purchase coverage. This can lead to a ‘death
spiral’ where premiums rise until the market collapses.
2. Which metric is most commonly used in Cost-Utility Analysis (CUA) to compare health
outcomes?
A. Gross Domestic Product (GDP) per capita
B. Net Present Value (NPV)
C. Quality-Adjusted Life Years (QALYs)
D. Consumer Price Index (CPI)
,Answer: C
Rationale: Quality-Adjusted Life Years, or QALYs, are a multidimensional measure that
considers both the quantity and quality of life. This allows health economists to compare
diverse medical interventions across different disease states using a single metric. By
weighting years of life by a utility score, the analysis provides a clearer picture of the value
gained per dollar spent.
3. Moral hazard in healthcare is best described as:
A. Physicians choosing treatment based on their own moral beliefs.
B. The failure of markets to provide public goods.
C. A change in behavior that occurs when individuals are protected from the financial risk
of their actions.
D. The unethical behavior of pharmaceutical companies regarding pricing.
Answer: C
Rationale: Moral hazard arises when an insured person faces a lower marginal cost for
healthcare services. Because the cost is subsidized, the individual is likely to consume more
care than they would if they paid the full price. This concept is a central challenge in
designing insurance plans that balance access with cost containment.
4. Which market structure is characterized by a single buyer of labor or services, such as a
large hospital in a small town?
A. Monopoly
, B. Oligopoly
C. Monopsony
D. Perfect Competition
Answer: C
Rationale: A monopsony exists when there is only one buyer for a specific input, such as
nurses or physicians in a remote area. This gives the employer significant market power to
set wages lower than they would be in a competitive market. It is the buyer-side equivalent
of a monopoly.
5. What is the primary goal of a Cost-Benefit Analysis (CBA)?
A. To measure outcomes in clinical units like blood pressure reduction.
B. To find the least expensive way to achieve a set health goal.
C. To determine if the monetary benefits of a program exceed its monetary costs.
D. To maximize the number of patients treated regardless of cost.
Answer: C
Rationale: Cost-Benefit Analysis is unique because it attempts to value both costs and
benefits in monetary terms. This allows policymakers to compare health programs with
non-health programs, such as education or infrastructure. If the net present value is
positive, the project is generally considered economically viable.
MHA 710 Healthcare Economics |
Louisiana State University in Shreveport
1. In healthcare economics, what does the term ‘Adverse Selection’ primarily refer to?
A. When individuals with higher health risks are more likely to buy insurance.
B. When patients choose low-quality providers due to lack of information.
C. The tendency of doctors to provide more services than necessary.
D. The process of insurance companies selecting the most profitable patients.
Answer: A
Rationale: Adverse selection occurs when there is an imbalance of information between
the buyer and the seller. In insurance markets, this typically means that people who know
they are high-risk are the ones most eager to purchase coverage. This can lead to a ‘death
spiral’ where premiums rise until the market collapses.
2. Which metric is most commonly used in Cost-Utility Analysis (CUA) to compare health
outcomes?
A. Gross Domestic Product (GDP) per capita
B. Net Present Value (NPV)
C. Quality-Adjusted Life Years (QALYs)
D. Consumer Price Index (CPI)
,Answer: C
Rationale: Quality-Adjusted Life Years, or QALYs, are a multidimensional measure that
considers both the quantity and quality of life. This allows health economists to compare
diverse medical interventions across different disease states using a single metric. By
weighting years of life by a utility score, the analysis provides a clearer picture of the value
gained per dollar spent.
3. Moral hazard in healthcare is best described as:
A. Physicians choosing treatment based on their own moral beliefs.
B. The failure of markets to provide public goods.
C. A change in behavior that occurs when individuals are protected from the financial risk
of their actions.
D. The unethical behavior of pharmaceutical companies regarding pricing.
Answer: C
Rationale: Moral hazard arises when an insured person faces a lower marginal cost for
healthcare services. Because the cost is subsidized, the individual is likely to consume more
care than they would if they paid the full price. This concept is a central challenge in
designing insurance plans that balance access with cost containment.
4. Which market structure is characterized by a single buyer of labor or services, such as a
large hospital in a small town?
A. Monopoly
, B. Oligopoly
C. Monopsony
D. Perfect Competition
Answer: C
Rationale: A monopsony exists when there is only one buyer for a specific input, such as
nurses or physicians in a remote area. This gives the employer significant market power to
set wages lower than they would be in a competitive market. It is the buyer-side equivalent
of a monopoly.
5. What is the primary goal of a Cost-Benefit Analysis (CBA)?
A. To measure outcomes in clinical units like blood pressure reduction.
B. To find the least expensive way to achieve a set health goal.
C. To determine if the monetary benefits of a program exceed its monetary costs.
D. To maximize the number of patients treated regardless of cost.
Answer: C
Rationale: Cost-Benefit Analysis is unique because it attempts to value both costs and
benefits in monetary terms. This allows policymakers to compare health programs with
non-health programs, such as education or infrastructure. If the net present value is
positive, the project is generally considered economically viable.
