MHA 706 HEALTHCARE ECONOMICS
EXAM 2026 ELITE STUDY COMPENDIUM
WITH DETAILED ANALYSIS AND SOLVED
QUESTIONS
⫸ 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.
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. 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. 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?
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. 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. Answer: a. at the point when
the diagnosis is made.
,⫸ Compared to the not-for-profit organizational form, the for-profit
environment
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. 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 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.
d. Physicians will strive to use the nursing staff efficiently. Answer: a.
Other medical inputs tend to be overused to maximize physicians'
productivity.
, ⫸ Economies of scale exist when:
a. long-run average costs decline as output increases.
b. long-run average costs increase as output increases.
c. long-run average costs are constant.
d. short-run average costs decline.
e. short-run average costs increase. Answer: a. long-run average costs
decline as output increases.
⫸ Which of the following statements about the distribution of
physicians among specialties is true in the United States?
a. There are twice as many generalists as there are specialists.
b. The majority of physicians specialize in general/family practice.
c. There are twice as many specialists as there are generalists.
d. The specialty distribution in the United States is similar to that of
the rest of the world. Answer: c. There are twice as many specialists
as there are generalists.
⫸ Starting salaries for female obstetricians/gynecologists are higher
than those of male obstetricians/gynecologists . What is the best
explanation for this?
a. There are more males in obstetrics/gynecology residency programs
than females.
b. The demand for female obstetricians/gynecologists is greater than
the demand for male obstetricians/gynecologists .
c. The demand for female obstetricians/gynecologists is less than the
demand for male obstetricians/gynecologists .
EXAM 2026 ELITE STUDY COMPENDIUM
WITH DETAILED ANALYSIS AND SOLVED
QUESTIONS
⫸ 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.
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. 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. 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?
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. 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. Answer: a. at the point when
the diagnosis is made.
,⫸ Compared to the not-for-profit organizational form, the for-profit
environment
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. 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 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.
d. Physicians will strive to use the nursing staff efficiently. Answer: a.
Other medical inputs tend to be overused to maximize physicians'
productivity.
, ⫸ Economies of scale exist when:
a. long-run average costs decline as output increases.
b. long-run average costs increase as output increases.
c. long-run average costs are constant.
d. short-run average costs decline.
e. short-run average costs increase. Answer: a. long-run average costs
decline as output increases.
⫸ Which of the following statements about the distribution of
physicians among specialties is true in the United States?
a. There are twice as many generalists as there are specialists.
b. The majority of physicians specialize in general/family practice.
c. There are twice as many specialists as there are generalists.
d. The specialty distribution in the United States is similar to that of
the rest of the world. Answer: c. There are twice as many specialists
as there are generalists.
⫸ Starting salaries for female obstetricians/gynecologists are higher
than those of male obstetricians/gynecologists . What is the best
explanation for this?
a. There are more males in obstetrics/gynecology residency programs
than females.
b. The demand for female obstetricians/gynecologists is greater than
the demand for male obstetricians/gynecologists .
c. The demand for female obstetricians/gynecologists is less than the
demand for male obstetricians/gynecologists .
