LSUS MHA 710 ECONOMICS EXAM 1 EXAM
STUDY GUIDE 2026 QUESTIONS AND
SOLUTIONS GRADED A+
●● An observational study provides a biased estimate of the true effect
of a treatment on a medical outcome because:
Answer: It is difficult to find a control group that is equivalent to the
treatment group
●● Suppose the demand curve for medical care services is perfectly
inelastic. What will happen to the equilibrium price and quantity if
supply increases?
Answer: Price will fall and quantity will stay the same
●● All of the following will cause a shift in the medical care supply
curve, except:
Answer: a change in the percentage of the population with health
insurance
●● If a hospital is experiencing economies of sale
Answer: its average cost curve is negatively sloped as output increases
●● Which of the following statements is based on positive analysis
, Answer: high health care prices are one of the primary reasons that the
US spends more on medical care than other countries
●● Assume an initial equilibrium at D1 and S1 with a price of $1.20
million per machine. If the government places a $100,000 excise tax on
each new scanner sold, the new equilibrium price will be:
Answer: less than 1.30 mill
●● how different is medical care from other commodities? All of the
following are from Arrow's thesis except
Answer: preponderance of non profit providers
●● which of the following might cause a market to produce less than the
optimal quantity
Answer: market control by a monopolist
●● an inferior good
Answer: causes the demand curve to shift less when income rises
●● assuming that inputs are perfect compliments, how will the
production isoquants be graphically depicted
Answer: l-shaped curves
STUDY GUIDE 2026 QUESTIONS AND
SOLUTIONS GRADED A+
●● An observational study provides a biased estimate of the true effect
of a treatment on a medical outcome because:
Answer: It is difficult to find a control group that is equivalent to the
treatment group
●● Suppose the demand curve for medical care services is perfectly
inelastic. What will happen to the equilibrium price and quantity if
supply increases?
Answer: Price will fall and quantity will stay the same
●● All of the following will cause a shift in the medical care supply
curve, except:
Answer: a change in the percentage of the population with health
insurance
●● If a hospital is experiencing economies of sale
Answer: its average cost curve is negatively sloped as output increases
●● Which of the following statements is based on positive analysis
, Answer: high health care prices are one of the primary reasons that the
US spends more on medical care than other countries
●● Assume an initial equilibrium at D1 and S1 with a price of $1.20
million per machine. If the government places a $100,000 excise tax on
each new scanner sold, the new equilibrium price will be:
Answer: less than 1.30 mill
●● how different is medical care from other commodities? All of the
following are from Arrow's thesis except
Answer: preponderance of non profit providers
●● which of the following might cause a market to produce less than the
optimal quantity
Answer: market control by a monopolist
●● an inferior good
Answer: causes the demand curve to shift less when income rises
●● assuming that inputs are perfect compliments, how will the
production isoquants be graphically depicted
Answer: l-shaped curves
