MHA 710 EXAM 1 STUDY GUIDE WITH 100%
CORRECT ANSWERS | LATEST UPDATE 2026
◉ What is adverse selection? Answer: 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? Answer: Demand for a good or
service is greater than the availability
◉ What does it mean to say people are assumed to make choices
rationally? Answer: focuses on individuals' efforts to best realize
their goals, given their resources.
◉ What does it mean to says resources are scarce? Answer:
Anything useful in consumption or production that has alternative
uses.
◉ What is opportunity cost? Answer: Potential loss from a missed
opportunity. Passing up the next best choice.
,◉ What does "marginal" refer to? Answer: The examination of the
costs and benefits through a small change in the production of goods
◉ What does efficiency refer to? Answer: No way to rearrange
production of goods in a way that makes one person more better off
without making somebody else worse off. How well an economy
uses scare resources to meet the needs/wants of their customers
◉ How do positive economic statements differ from normative
economic statements? Answer: Positive economics is objective while
normative economics is subjective. Facts/ What is vs What should be
◉ How can economics be applied to the health sector? Answer:
Describe, Explain, Evaluate, Plan
◉ As we progress through the chapters, think about the special
characteristics that apply to the health sector that might limit the
applicability of traditional economic models. Answer: Social
determinants of health, few insurance companies that providers rely
on, not a perfectly competitive market
◉ How are healthcare products both outputs and inputs? Can you
give an example? Answer: Products (goods and services are
considered products) are commonly both inputs and outputs. For
example, a surgical tool is an input into a surgery and an output of a
surgical tool company. Similarly, the surgery itself can be considered
, an output of the surgical team or an input into the health of the
patient.
◉ What is a life year? And what is it used for in the context of this
chapter? Answer: One additional year of life. It can equal one added
year of life for an individual or an average of 1/nth of a year of life
for n people. An example is spending $1 million by reducing
childhood obesity and saving thousands of lives or using if for
colonoscopies in 81 year old african american men and saving few
lives.
◉ What are examples of interventions that have the most impact on
life years and those that have less impact? Answer: Interventions
with the most include antismoking, reducing childhood obesity, and
multidisciplinary measurement of heart failure. Interventions with
the least include colonoscopies for african american men who are 81
or 76 and multidisciplinary heart failure measurement with
exercise.
◉ How does healthcare spending per person in the US compare to
other countries? Answer: US spends far more per person on
healthcare than any other large countries.
◉ How does US life expectancy at birth compare to other countries?
Answer: 27 out of 34 of the OECD countries (bad!)
CORRECT ANSWERS | LATEST UPDATE 2026
◉ What is adverse selection? Answer: 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? Answer: Demand for a good or
service is greater than the availability
◉ What does it mean to say people are assumed to make choices
rationally? Answer: focuses on individuals' efforts to best realize
their goals, given their resources.
◉ What does it mean to says resources are scarce? Answer:
Anything useful in consumption or production that has alternative
uses.
◉ What is opportunity cost? Answer: Potential loss from a missed
opportunity. Passing up the next best choice.
,◉ What does "marginal" refer to? Answer: The examination of the
costs and benefits through a small change in the production of goods
◉ What does efficiency refer to? Answer: No way to rearrange
production of goods in a way that makes one person more better off
without making somebody else worse off. How well an economy
uses scare resources to meet the needs/wants of their customers
◉ How do positive economic statements differ from normative
economic statements? Answer: Positive economics is objective while
normative economics is subjective. Facts/ What is vs What should be
◉ How can economics be applied to the health sector? Answer:
Describe, Explain, Evaluate, Plan
◉ As we progress through the chapters, think about the special
characteristics that apply to the health sector that might limit the
applicability of traditional economic models. Answer: Social
determinants of health, few insurance companies that providers rely
on, not a perfectly competitive market
◉ How are healthcare products both outputs and inputs? Can you
give an example? Answer: Products (goods and services are
considered products) are commonly both inputs and outputs. For
example, a surgical tool is an input into a surgery and an output of a
surgical tool company. Similarly, the surgery itself can be considered
, an output of the surgical team or an input into the health of the
patient.
◉ What is a life year? And what is it used for in the context of this
chapter? Answer: One additional year of life. It can equal one added
year of life for an individual or an average of 1/nth of a year of life
for n people. An example is spending $1 million by reducing
childhood obesity and saving thousands of lives or using if for
colonoscopies in 81 year old african american men and saving few
lives.
◉ What are examples of interventions that have the most impact on
life years and those that have less impact? Answer: Interventions
with the most include antismoking, reducing childhood obesity, and
multidisciplinary measurement of heart failure. Interventions with
the least include colonoscopies for african american men who are 81
or 76 and multidisciplinary heart failure measurement with
exercise.
◉ How does healthcare spending per person in the US compare to
other countries? Answer: US spends far more per person on
healthcare than any other large countries.
◉ How does US life expectancy at birth compare to other countries?
Answer: 27 out of 34 of the OECD countries (bad!)
