PHLT 412 EXAM 3 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

PHLT 412 EXAM 3 UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS

Question:
1. ECONOMIC DECI- SION MAKING
Answer:
-economists believe that people are rational actors who will never purposely choose to make themselves
worse off
-people seek to maximize utility
-given the scarcity resources, decisions need to be made about the production, distribution, and
consumption of health care resources
-consider individual preference and efficiency

Question:
2. UTILITY ANALY- SIS
Answer:
-diminishing marginal utility
-opportunity costs

Question:
3. SCARCE RE- SOURCE
Answer:
-finite amount of healthcare goods, personnel and capital inputs
-consumer choices are based on efficiency: allocative efficiency, production efficiency, technical
efficiency
-should we think about equity or fairness?

Question:
4. DEMAND
Answer:
-the quantity of goods and services that a consumer is willing and able to purchase over a specified time
-common demand shifters
-price of the original good, price of a substitute good, and price of a complementary good
-income
-quality (actual or preceived)
-physical profile of consumer

Question:
5. DEMAND ELAS- TICITY
Answer:
-the percentage in the quantity demanded resulting from a 1% change in price or income
-if a product is elastic: a change in price/income will result in an equivalent or greater change in demand
-if a product is inelastic: demand for the good is not sensitive to a change in price/income

Question:
6. HEALTH INSUR- ANCE AND DE- MAND

, Answer:
-health insurance acts as a buffer between the consumer and cost of health care goods and services
-goods and services cost the consumer less than the charged price because of the presence of health
insurance

Question:
7. MORAL HAZARD
Answer:
-because a consumer does not pay the full cost of a good, the consumer may purchase more than goods
than he would otherwise purchase without insurance

Question:
8. SUPPLY
Answer:
-the amount of goods and services that producers are able and willing to sell at a given price over a given
period of time
-common supply shifters: input costs, sale price, number of sellers, change in technology
-suppliers are driven to maximize profit
-in a competitive market, profit is maximized at the level of output where marginal cost equals price
-equilibrium exists in the market when there is a balance between the quantity supplied and the quantity
demanded

Question:
9. SUPPLY ELASTICI- TY
Answer:
-the percentage in quantity supplied resulting from a 1% increase in the price (or other variables, such as
inputs) of buying the good
-if a product is elastic: a change in price (or other variables) will result in an equivalent or greater change
in supply
-if a product is inelastic: supply of the good is not sensitive to a change in price or other variables

Question:
10. HEALTH INSUR- ANCE AND SUP- PLY
Answer:
-the presence of health insurance may impact a provider's willingness to supply goods and services

Question:
11. COMPETING CONCERNS
Answer:
-providers act as a patient's agent and act in a patient's best interest
-providers may have a financial incentive to act or refrain from acting in a certain way due to insurance
arrangements or the lack of insurance

Question:
12. SUPPLIER-IN- DUCED DEMAND