MHA 710 Exam 1 | 100% Correct Answers | Verified | Latest 2024 Version

What is "economics"? - A Map for decision making. Economics analyzes the allocation of scarce resources. What are some of the specific challenges faced by managers in healthcare? - 1. The central roles of risk and uncertainty 2. The complexities created by insurance 3. The perils produced by information asymmetries 4. The problems posed by not-for-profit organizations 5. The rapid and confusing course of technical and institutional change What does asymmetric information mean? Can you give an example? - When one party in a transaction has less information than the other party. For example, physicians and other healthcare providers usually understand patients' medical options better than patients do. Unaware of their choices, patients may accept recommendations for therapies that are not cost-effective or, recognizing their vulnerability to physicians' self-serving advice, may resist recommendations made in their best interest. What is adverse selection? - A situation that occurs when buyers have better information than sellers. For example, high-risk consumers are willing to pay more for insurance than low-risk consumers are. (Organizations that have difficulty distinguishing high-risk from low-risk consumers are unlikely to be profitable.) What is the problem of scarcity? - Demand for a good or service is greater than the availability What does it mean to say people are assumed to make choices rationally? - focuses on individuals' efforts to best realize their goals, g