MHA 710 - HEALTHCARE ECONOMICS
EXAM QUESTIONS AND ANSWERS
GRADED A+ 2025/2026
In order to be a successful price discriminator, a provider must have a degree of market power
(depicted by a downward-sloping demand curve) and meet what other condition(s)?
a. Customers cannot know that different prices are being charged.
b. Markets must be segmentable, identifying differences in ability to pay.
c. Demand for services must be relatively price elastic.
d. Profitable service expansion opportunities must be limited.
e. The provider must have excess capacity to accommodate the extra business. - ANS b.
Markets must be segmentable, identifying differences in ability to pay.
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. - ANS d. raise the costs of operating in many of the nation's rural and inner-city
hospitals.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,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. - ANS 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. -
ANS 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. - ANS 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.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, e. does not provide charity care. - ANS 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 - ANS 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. - ANS 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. - ANS 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.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
EXAM QUESTIONS AND ANSWERS
GRADED A+ 2025/2026
In order to be a successful price discriminator, a provider must have a degree of market power
(depicted by a downward-sloping demand curve) and meet what other condition(s)?
a. Customers cannot know that different prices are being charged.
b. Markets must be segmentable, identifying differences in ability to pay.
c. Demand for services must be relatively price elastic.
d. Profitable service expansion opportunities must be limited.
e. The provider must have excess capacity to accommodate the extra business. - ANS b.
Markets must be segmentable, identifying differences in ability to pay.
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. - ANS d. raise the costs of operating in many of the nation's rural and inner-city
hospitals.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,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. - ANS 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. -
ANS 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. - ANS 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.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, e. does not provide charity care. - ANS 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 - ANS 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. - ANS 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. - ANS 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.
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
