GRADUATE EXAMINATION - INSTRUCTOR COPY WITH ANSWER KEY AND RATIONALES
NUR 621 Topic 2 Assignment
Economic Theories and Models in Health Care
Academic Year 2026-2027 | 75 Multiple-Choice Questions | Six Sections | Single Best Answer
Directions to faculty: This instructor copy contains the complete examination together with the marked
answer key and a rationale for every item. The correct option in each question is flagged with a bold
[CORRECT] tag, followed by a Correct Answer line and a two-to-four sentence Rationale that explains the
economic reasoning and identifies why the distractors fail. Student copies should be generated with the flags,
answers, and rationales removed.
Examination structure: Section 1 - Microeconomics in Health Care (Questions 1-15); Section 2 -
Macroeconomics in Health Care (Questions 16-25); Section 3 - Market Failure in Health Care (Questions
26-35); Section 4 - Reimbursement Models and Payment Systems (Questions 36-50); Section 5 - Economic
Evaluation Methods in Health Care (Questions 51-60); Section 6 - Health Policy, Economic Models, and
Behavioral Economics (Questions 61-75). Each question offers four options (A through D) with exactly one
best answer.
Cognitive and stylistic blueprint: approximately 25 percent of items test recall of economic theory, 50
percent apply theory to realistic nursing-leadership scenarios, and 25 percent require analysis of evidence,
calculations, or competing policy objectives. Roughly 70 percent of items are scenario-based and 30 percent
are direct recall or definition items. Distractors are engineered around documented NUR 621 error patterns,
including model confusion, market-failure misdiagnosis, reimbursement-model misuse, evaluation calculation
errors, and policy-theory conflations.
SECTION 1 - MICROECONOMICS IN HEALTH CARE
Questions 1-15 | Supply and demand, market structures, price elasticity, consumer behavior
1. A rural hospital faces a 12 percent operating shortfall, and the executive team must choose between
funding a new birthing unit or expanding the cardiac rehabilitation program. Both cannot be funded with
the resources available in the coming fiscal year. Which fundamental economic concept is illustrated by
this decision context?
A. Opportunity cost of capital, meaning the interest rate the hospital pays on borrowed funds
B. Scarcity, because limited resources force a choice among competing clinical priorities [CORRECT]
C. Perfect competition, because two programs are competing for the same funds
D. Demand-induced expansion, because patients have requested both new services
Correct Answer: B
Rationale: Scarcity is the foundational economic problem: unlimited wants collide with finite resources,
forcing nurse leaders to prioritize and allocate deliberately. Option A confuses opportunity cost with the cost
of borrowing, which is a financing detail rather than the forcing function; option C misapplies a
market-structure concept that describes many buyers and sellers, not an internal budget tradeoff; option D
mislabels the situation as demand driven when the constraint is supply-side. Recognizing scarcity is the first
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 1 of 32
,NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
step in every NUR 621 resource-allocation analysis, because it frames why explicit, transparent prioritization
criteria are required.
2. After lengthy deliberation, the board in the scenario above selects the birthing unit. The value the
organization places on the forgone cardiac rehabilitation expansion is best described as which of the
following?
A. The opportunity cost of the decision [CORRECT]
B. A sunk cost that should be recovered through volume growth
C. The marginal utility of the birthing unit
D. Allocative inefficiency in the local healthcare market
Correct Answer: A
Rationale: Opportunity cost is the value of the next-best alternative forgone, here the cardiac expansion, and
it is the true economic cost of any choice even when no cash changes hands. Option B misapplies the
sunk-cost concept, which refers to unrecoverable past expenditures that should never drive forward-looking
decisions; option C confuses added patient satisfaction with forgone value; option D describes a market-level
outcome rather than the internal cost of this specific choice. NUR 621 students must habitually ask what is
given up, not merely what is paid, when evaluating capital and staffing decisions.
3. Which statement best defines opportunity cost as applied to healthcare resource allocation?
A. The total monetary expenditure recorded for a chosen intervention
B. The combined value of every alternative that was not selected
C. The value of the single next-best alternative forgone when a choice is made [CORRECT]
D. The market price charged to patients for the chosen service
Correct Answer: C
Rationale: Opportunity cost is rigorously defined as the value of the one next-best alternative sacrificed, not
the sum of all rejected options and not the accounting outlay. Option A mistakes accounting cost for economic
cost; option B overstates the concept by aggregating all alternatives when only the best forgone one counts;
option D confuses price with cost, ignoring that price may diverge from sacrifice, especially under insurance.
This distinction underpins cost-effectiveness reasoning in NUR 621, where the benchmark for any new
program is what the same dollars could have purchased elsewhere.
4. A health plan raises the primary care copayment from 10 dollars to 30 dollars per visit. Over the
following year, visit volume declines modestly, and nurse navigators report that patients are more
deliberate about scheduling. Which economic principle best explains the observed decline?
A. The Giffen paradox, in which demand rises as price rises
B. Supplier-induced demand, in which clinicians create additional visits
C. The Veblen effect, in which higher prices increase prestige and demand
D. The law of demand, in which quantity demanded falls as the price to consumers rises, all else equal
[CORRECT]
Correct Answer: D
Rationale: Cost sharing raises the effective out-of-pocket price, producing a movement along the demand
curve and a reduction in quantity demanded, which is precisely the law of demand. Option A describes a rare
inferior-good anomaly with no relevance to routine ambulatory care; option B describes provider behavior
rather than patient response to price; option C applies to conspicuous luxury consumption, not necessary care.
Nurse leaders should anticipate that modest, proportional declines are typical because much healthcare
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 2 of 32
,NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
demand is price inelastic, a theme developed in the elasticity items that follow.
5. A statewide nursing shortage drives registered nurse wages up sharply. Holding all else constant, what
is the most likely effect on the market supply curve for hospital inpatient services?
A. The supply curve shifts to the left, because higher input costs reduce the quantity of services supplied
at every price [CORRECT]
B. The supply curve shifts to the right, because hospitals will hire more expensive nurses
C. There is a downward movement along the existing supply curve
D. The supply curve is unaffected, because labor is not an input to hospital production
Correct Answer: A
Rationale: Wages are a major input cost, and an increase in input prices shifts the entire supply curve
leftward, signaling a lower quantity supplied at every price and upward pressure on service prices. Option B
inverts the economics, since costlier inputs reduce rather than expand supply; option C confuses a shift of the
curve with movement along it, which occurs only when the service price itself changes; option D is factually
wrong because nursing labor is the largest single hospital expense. For NUR 621 leaders, this linkage explains
why nurse staffing crises translate directly into capacity constraints and cost escalation.
6. Which set of conditions characterizes a perfectly competitive market, a structure largely absent from
healthcare delivery?
A. Few large sellers whose pricing decisions are interdependent
B. A single seller protected by high barriers to entry
C. Many buyers and sellers, homogeneous products, free entry and exit, and perfect information
[CORRECT]
D. Differentiated products with brand loyalty and nonprice competition among many sellers
Correct Answer: C
Rationale: Perfect competition requires numerous small participants, a standardized product, effortless entry
and exit, and complete information, conditions that produce price taking and zero long-run economic profit.
Option A describes an oligopoly, option B describes a monopoly, and option D describes monopolistic
competition, so each distractor is a deliberate market-structure misidentification that NUR 621 exams are
designed to catch. Healthcare violates nearly every competitive condition because information is asymmetric,
products are heterogeneous, entry is blocked by licensure and capital costs, and third-party payment blunts
price sensitivity.
7. In a metropolitan market, four hospital systems account for 85 percent of inpatient admissions. Each
system sets prices with explicit attention to what its rivals charged last quarter, and new specialty hospitals
rarely enter. Which market structure best describes this market?
A. Perfect competition, because four sellers are numerous relative to patient demand
B. Oligopoly, because a small number of large interdependent sellers dominate the market [CORRECT]
C. Monopoly, because the systems jointly set a single market price
D. Monopolistic competition, because each hospital advertises distinctive amenities
Correct Answer: B
Rationale: A market controlled by a few large, mutually interdependent firms with substantial entry barriers
is the definition of an oligopoly, and hospital consolidation through 2026 has pushed many US markets toward
exactly this structure. Option A miscounts four firms as many when concentration of 85 percent is
quintessentially oligopolistic; option C overstates the case, since a monopoly requires a single seller rather than
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 3 of 32
, NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
a coordinated few; option D requires many sellers, which is absent here. Nurse executives must understand
oligopolistic interdependence because pricing, service duplication, and payer contracting power all flow from
it.
8. A critical access hospital is the only provider of emergency and inpatient care within a 90-mile radius,
and the capital and regulatory requirements of building a rival facility are prohibitive. As a seller of acute
care services, this hospital is best classified as which of the following?
A. A monopsony, because patients have no alternative hospital
B. A monopolistic competitor, because it markets unique community branding
C. A perfect competitor, because emergency care demand is completely inelastic
D. A monopoly, because it is the sole seller of a product with high barriers to entry [CORRECT]
Correct Answer: D
Rationale: A monopoly is defined by a single seller facing high barriers to entry, and geographic isolation
plus capital and licensure requirements create exactly those barriers. Option A reverses the concept, because a
monopsony is a single buyer, although this same hospital may indeed act as a monopsonist employer of nurses
in the local labor market, a nuance NUR 621 students should keep straight; option B requires many sellers;
option C incorrectly asserts that inelastic demand defines a market structure. Monopoly power in rural
markets raises pricing and access concerns that shape federal support programs for critical access hospitals.
9. A suburb contains many independently owned urgent care clinics. Each competes on extended hours,
short wait times, and brand reputation, entry costs are modest, and patients can easily compare options
online. Which market structure best characterizes this market?
A. Oligopoly, because national brands dominate every market
B. Monopoly, because each clinic holds a local geographic franchise
C. Monopolistic competition, because many sellers offer differentiated products with easy entry
[CORRECT]
D. Perfect competition, because urgent care is a standardized commodity
Correct Answer: C
Rationale: Many sellers, product differentiation around hours, convenience, and brand, low entry barriers,
and extensive patient information together define monopolistic competition. Option A overstates brand
concentration, since independent clinics remain numerous; option B mistakes local convenience advantages
for an entry barrier sufficient to sustain monopoly; option D ignores the differentiation that is the hallmark of
this structure. The distinction matters for nurse leaders developing retail health strategy, because
differentiation, not price alone, drives utilization in such markets.
10. An insurer increases the out-of-pocket price of emergency department visits by 20 percent, and
utilization falls by only 2 percent over the following year. What does this response demonstrate about the
demand for emergency services?
A. Demand is price inelastic, with an elasticity of approximately 0.1, because the service is a necessity
with few substitutes [CORRECT]
B. Demand is price elastic, with an elasticity of approximately 10, because patients respond strongly to
price
C. Demand is unit elastic, because quantity changes proportionally with price
D. Demand is perfectly elastic, because any price increase eliminates all demand
Correct Answer: A
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 4 of 32
NUR 621 Topic 2 Assignment
Economic Theories and Models in Health Care
Academic Year 2026-2027 | 75 Multiple-Choice Questions | Six Sections | Single Best Answer
Directions to faculty: This instructor copy contains the complete examination together with the marked
answer key and a rationale for every item. The correct option in each question is flagged with a bold
[CORRECT] tag, followed by a Correct Answer line and a two-to-four sentence Rationale that explains the
economic reasoning and identifies why the distractors fail. Student copies should be generated with the flags,
answers, and rationales removed.
Examination structure: Section 1 - Microeconomics in Health Care (Questions 1-15); Section 2 -
Macroeconomics in Health Care (Questions 16-25); Section 3 - Market Failure in Health Care (Questions
26-35); Section 4 - Reimbursement Models and Payment Systems (Questions 36-50); Section 5 - Economic
Evaluation Methods in Health Care (Questions 51-60); Section 6 - Health Policy, Economic Models, and
Behavioral Economics (Questions 61-75). Each question offers four options (A through D) with exactly one
best answer.
Cognitive and stylistic blueprint: approximately 25 percent of items test recall of economic theory, 50
percent apply theory to realistic nursing-leadership scenarios, and 25 percent require analysis of evidence,
calculations, or competing policy objectives. Roughly 70 percent of items are scenario-based and 30 percent
are direct recall or definition items. Distractors are engineered around documented NUR 621 error patterns,
including model confusion, market-failure misdiagnosis, reimbursement-model misuse, evaluation calculation
errors, and policy-theory conflations.
SECTION 1 - MICROECONOMICS IN HEALTH CARE
Questions 1-15 | Supply and demand, market structures, price elasticity, consumer behavior
1. A rural hospital faces a 12 percent operating shortfall, and the executive team must choose between
funding a new birthing unit or expanding the cardiac rehabilitation program. Both cannot be funded with
the resources available in the coming fiscal year. Which fundamental economic concept is illustrated by
this decision context?
A. Opportunity cost of capital, meaning the interest rate the hospital pays on borrowed funds
B. Scarcity, because limited resources force a choice among competing clinical priorities [CORRECT]
C. Perfect competition, because two programs are competing for the same funds
D. Demand-induced expansion, because patients have requested both new services
Correct Answer: B
Rationale: Scarcity is the foundational economic problem: unlimited wants collide with finite resources,
forcing nurse leaders to prioritize and allocate deliberately. Option A confuses opportunity cost with the cost
of borrowing, which is a financing detail rather than the forcing function; option C misapplies a
market-structure concept that describes many buyers and sellers, not an internal budget tradeoff; option D
mislabels the situation as demand driven when the constraint is supply-side. Recognizing scarcity is the first
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 1 of 32
,NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
step in every NUR 621 resource-allocation analysis, because it frames why explicit, transparent prioritization
criteria are required.
2. After lengthy deliberation, the board in the scenario above selects the birthing unit. The value the
organization places on the forgone cardiac rehabilitation expansion is best described as which of the
following?
A. The opportunity cost of the decision [CORRECT]
B. A sunk cost that should be recovered through volume growth
C. The marginal utility of the birthing unit
D. Allocative inefficiency in the local healthcare market
Correct Answer: A
Rationale: Opportunity cost is the value of the next-best alternative forgone, here the cardiac expansion, and
it is the true economic cost of any choice even when no cash changes hands. Option B misapplies the
sunk-cost concept, which refers to unrecoverable past expenditures that should never drive forward-looking
decisions; option C confuses added patient satisfaction with forgone value; option D describes a market-level
outcome rather than the internal cost of this specific choice. NUR 621 students must habitually ask what is
given up, not merely what is paid, when evaluating capital and staffing decisions.
3. Which statement best defines opportunity cost as applied to healthcare resource allocation?
A. The total monetary expenditure recorded for a chosen intervention
B. The combined value of every alternative that was not selected
C. The value of the single next-best alternative forgone when a choice is made [CORRECT]
D. The market price charged to patients for the chosen service
Correct Answer: C
Rationale: Opportunity cost is rigorously defined as the value of the one next-best alternative sacrificed, not
the sum of all rejected options and not the accounting outlay. Option A mistakes accounting cost for economic
cost; option B overstates the concept by aggregating all alternatives when only the best forgone one counts;
option D confuses price with cost, ignoring that price may diverge from sacrifice, especially under insurance.
This distinction underpins cost-effectiveness reasoning in NUR 621, where the benchmark for any new
program is what the same dollars could have purchased elsewhere.
4. A health plan raises the primary care copayment from 10 dollars to 30 dollars per visit. Over the
following year, visit volume declines modestly, and nurse navigators report that patients are more
deliberate about scheduling. Which economic principle best explains the observed decline?
A. The Giffen paradox, in which demand rises as price rises
B. Supplier-induced demand, in which clinicians create additional visits
C. The Veblen effect, in which higher prices increase prestige and demand
D. The law of demand, in which quantity demanded falls as the price to consumers rises, all else equal
[CORRECT]
Correct Answer: D
Rationale: Cost sharing raises the effective out-of-pocket price, producing a movement along the demand
curve and a reduction in quantity demanded, which is precisely the law of demand. Option A describes a rare
inferior-good anomaly with no relevance to routine ambulatory care; option B describes provider behavior
rather than patient response to price; option C applies to conspicuous luxury consumption, not necessary care.
Nurse leaders should anticipate that modest, proportional declines are typical because much healthcare
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 2 of 32
,NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
demand is price inelastic, a theme developed in the elasticity items that follow.
5. A statewide nursing shortage drives registered nurse wages up sharply. Holding all else constant, what
is the most likely effect on the market supply curve for hospital inpatient services?
A. The supply curve shifts to the left, because higher input costs reduce the quantity of services supplied
at every price [CORRECT]
B. The supply curve shifts to the right, because hospitals will hire more expensive nurses
C. There is a downward movement along the existing supply curve
D. The supply curve is unaffected, because labor is not an input to hospital production
Correct Answer: A
Rationale: Wages are a major input cost, and an increase in input prices shifts the entire supply curve
leftward, signaling a lower quantity supplied at every price and upward pressure on service prices. Option B
inverts the economics, since costlier inputs reduce rather than expand supply; option C confuses a shift of the
curve with movement along it, which occurs only when the service price itself changes; option D is factually
wrong because nursing labor is the largest single hospital expense. For NUR 621 leaders, this linkage explains
why nurse staffing crises translate directly into capacity constraints and cost escalation.
6. Which set of conditions characterizes a perfectly competitive market, a structure largely absent from
healthcare delivery?
A. Few large sellers whose pricing decisions are interdependent
B. A single seller protected by high barriers to entry
C. Many buyers and sellers, homogeneous products, free entry and exit, and perfect information
[CORRECT]
D. Differentiated products with brand loyalty and nonprice competition among many sellers
Correct Answer: C
Rationale: Perfect competition requires numerous small participants, a standardized product, effortless entry
and exit, and complete information, conditions that produce price taking and zero long-run economic profit.
Option A describes an oligopoly, option B describes a monopoly, and option D describes monopolistic
competition, so each distractor is a deliberate market-structure misidentification that NUR 621 exams are
designed to catch. Healthcare violates nearly every competitive condition because information is asymmetric,
products are heterogeneous, entry is blocked by licensure and capital costs, and third-party payment blunts
price sensitivity.
7. In a metropolitan market, four hospital systems account for 85 percent of inpatient admissions. Each
system sets prices with explicit attention to what its rivals charged last quarter, and new specialty hospitals
rarely enter. Which market structure best describes this market?
A. Perfect competition, because four sellers are numerous relative to patient demand
B. Oligopoly, because a small number of large interdependent sellers dominate the market [CORRECT]
C. Monopoly, because the systems jointly set a single market price
D. Monopolistic competition, because each hospital advertises distinctive amenities
Correct Answer: B
Rationale: A market controlled by a few large, mutually interdependent firms with substantial entry barriers
is the definition of an oligopoly, and hospital consolidation through 2026 has pushed many US markets toward
exactly this structure. Option A miscounts four firms as many when concentration of 85 percent is
quintessentially oligopolistic; option C overstates the case, since a monopoly requires a single seller rather than
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 3 of 32
, NUR 621 | Topic 2 Assignment: Economic Theories and Models in Health Care
a coordinated few; option D requires many sellers, which is absent here. Nurse executives must understand
oligopolistic interdependence because pricing, service duplication, and payer contracting power all flow from
it.
8. A critical access hospital is the only provider of emergency and inpatient care within a 90-mile radius,
and the capital and regulatory requirements of building a rival facility are prohibitive. As a seller of acute
care services, this hospital is best classified as which of the following?
A. A monopsony, because patients have no alternative hospital
B. A monopolistic competitor, because it markets unique community branding
C. A perfect competitor, because emergency care demand is completely inelastic
D. A monopoly, because it is the sole seller of a product with high barriers to entry [CORRECT]
Correct Answer: D
Rationale: A monopoly is defined by a single seller facing high barriers to entry, and geographic isolation
plus capital and licensure requirements create exactly those barriers. Option A reverses the concept, because a
monopsony is a single buyer, although this same hospital may indeed act as a monopsonist employer of nurses
in the local labor market, a nuance NUR 621 students should keep straight; option B requires many sellers;
option C incorrectly asserts that inelastic demand defines a market structure. Monopoly power in rural
markets raises pricing and access concerns that shape federal support programs for critical access hospitals.
9. A suburb contains many independently owned urgent care clinics. Each competes on extended hours,
short wait times, and brand reputation, entry costs are modest, and patients can easily compare options
online. Which market structure best characterizes this market?
A. Oligopoly, because national brands dominate every market
B. Monopoly, because each clinic holds a local geographic franchise
C. Monopolistic competition, because many sellers offer differentiated products with easy entry
[CORRECT]
D. Perfect competition, because urgent care is a standardized commodity
Correct Answer: C
Rationale: Many sellers, product differentiation around hours, convenience, and brand, low entry barriers,
and extensive patient information together define monopolistic competition. Option A overstates brand
concentration, since independent clinics remain numerous; option B mistakes local convenience advantages
for an entry barrier sufficient to sustain monopoly; option D ignores the differentiation that is the hallmark of
this structure. The distinction matters for nurse leaders developing retail health strategy, because
differentiation, not price alone, drives utilization in such markets.
10. An insurer increases the out-of-pocket price of emergency department visits by 20 percent, and
utilization falls by only 2 percent over the following year. What does this response demonstrate about the
demand for emergency services?
A. Demand is price inelastic, with an elasticity of approximately 0.1, because the service is a necessity
with few substitutes [CORRECT]
B. Demand is price elastic, with an elasticity of approximately 10, because patients respond strongly to
price
C. Demand is unit elastic, because quantity changes proportionally with price
D. Demand is perfectly elastic, because any price increase eliminates all demand
Correct Answer: A
Academic Year 2026-2027 | Complete Examination with Answer Key | 75 Questions Page 4 of 32
