Health care

A. is the most important determinant of health in OECD countries.

B. is the most expensive determinant of health in OECD countries.
C. spending continues to grow rapidly in most OECD countries.
D. sector is one of the largest sectors in most OECD countries.
ANSWER: D. sector is one of the largest sectors in most OECD countries.

What statement best describes a health system?

A. Aspects of society that have an important bearing on the health care of individuals
and the population.
B. Aspects of society that have an important bearing on the health of individuals and the
population.
C. Aspects of society that have an important bearing on the health care at the
population level.
D. Aspects of society that have an important bearing on health at the population level.
ANSWER: B. Aspects of society that have an important bearing on the health of
individuals and the population.

Rather than aggregate health expenditures, we often look at real expenditures per capita.
This calculation requires us to deflate the aggregate expenditures by:

A. the purchasing power of the currency.

B. the size of the population.
C. the cost of health care.
D. Answers a. and b. are correct.
ANSWER: D. Answers a. and b. are correct.

Public sector financing covers about of health care expenditures in Canada.

A. 100%
B. 70%
C. 50%
D. 30%
ANSWER: B. 70%

The following is not a driver of increased health care expenditures:

A. Increases in the quantity of health care

B. Increases in the quality of health care
C. Increases in the price of health care
D. Increases in the health care covered under public insurance
ANSWER: D. Increases in the health care covered under public insurance
How does Canada compare to other OECD countries regarding the proportion of health care
expenditures covered by public financing.

A. the highest
B. relatively high
C. about the same
D. relatively low
ANSWER: D. relatively low

The principles of the Canada Health Act include all EXCEPT

A. Universality
B. Portability
C. Equity
D. Public Administration
ANSWER: C. Equity

In Canada, the supply of physicians has

A. decreased substantially over time resulting in the current shortage.

B. risen steadily over time but has not kept up to population growth.
C. mainly risen over time but practice behaviours have changed.
D. decreased sharply recently leading to the current shortage.
ANSWER: C. mainly risen over time but practice behaviours have changed.

Which statement best describes governance of the Canadian Health Care System?

A. Provinces/Territories have jurisdiction adhering to the guidelines of the Canada

Health Act
B. The Federal Government controls provincial/territorial actions with the Canada Health
Act
C. Federal/Provincial/Territorial governments share jurisdiction over the Health Care
System.
D. The Canada Health Act provides the governance structure for the Health Care
System.
ANSWER: A. Provinces/Territories have jurisdiction adhering to the guidelines of the
Canada Health Act
The following is not a measure of health outcome:

A. Number of physicians per capita.

B. Population incidence of malaria.
C. Death rate for children under the age of 5.
D. Estimated men's lifespan.
ANSWER: A. Number of physicians per capita.

The creation of an organ transplant lists is an example of:

A. distributional equity
B. vertical equity
C. horizontal equity
D. procedural equity
ANSWER: D. procedural equity

Which statement best describes cost-effectiveness efficiency?

A. Cost-effectiveness efficiency takes into account relative input prices.

B. Cost-effectiveness efficiency leads to technical efficiency.
C. A single cost-effective measure can always be identified.
D. Cost-effectiveness efficiency requires allocative efficiency.
ANSWER: A. Cost-effectiveness efficiency takes into account relative input prices.

A representation of society's preferences and attitudes towards the amount and distribution
of welfare in a society is called

A. A utility function
B. A social welfare function
C. The Grand Utility Frontier
D. The Edgeworth Box
ANSWER: B. A social welfare function

Which statement about opportunity cost is NOT true:

A. Opportunity cost is the financial value of the forgone opportunity

B. Opportunity costs are important because resources are limited.
C. Opportunity cost is a fundamental economic concept.
D. Opportunity cost emphasizes the true social cost of a policy.
ANSWER: A. Opportunity cost is the financial value of the forgone opportunity
Which statement best describes technical efficiency?

A. Enables producers to identify the most up to date production technology.

B. Maximizes outputs for given inputs conditional on a production technology.
C. Can only be identified when costs of alternative inputs are known.
D. Always leads to cost efficiency and allocative efficiency.
ANSWER: B. Maximizes outputs for given inputs conditional on a production
technology.

Which statement best describes the Pareto Criterion?

A. it identifies the best possible allocation

B. is a strong economic tool used in policy analysis.
C. is successful if winners can compensate losers.
D. if strictly applied would lead to policy paralysis.
ANSWER: D. if strictly applied would lead to policy paralysis.

Which statement best describes allocative efficiency?

A. Allocative efficiency results from technical efficiency.

B. Allocative efficiency results from cost-effective efficiency.
C. Allocative efficiency relates to what society values.
D. Allocative efficiency relates to fairness.
ANSWER: C. Allocative efficiency relates to what society values.

Which statement is NOT true?

A. Marginal analysis and average analysis lead to the similar outcomes.

B. Marginal analysis asks 'what happens if I do something a little more?
C. Marginal analysis is used to identify the optimal level of a good or activity.
D. Total benefit is maximized where marginal cost equals marginal benefit.
ANSWER: A. Marginal analysis and average analysis lead to the similar outcomes.

Subsidizing prescription medications for low-income families demonstrates

A. horizontal equity
B. vertical equity
C. procedural equity
D. distributional efficiency
ANSWER: B. vertical equity
Providing free prescription medications for all patients who need them demonstrates

A. horizontal equity
B. vertical equity
C. procedural equity
D. distributional efficiency
ANSWER: A. horizontal equity

Market power implies

A. a well functioning market.

B. only market forces set prices.
C. an ability to influence market price.
D. perfect competition.
ANSWER: C. an ability to influence market price.

Which statement is NOT true about barriers to entry in a market?

A. may occur naturally

B. may arise artificially
C. may be due to large fixed costs
D. will lead to a monopoly
ANSWER: D. will lead to a monopoly

Perfect competition does not rule out

A. externalities
B. market power
C. market failure
D. limited information
ANSWER: D. limited information

The following is NOT true when private benefits differ from social benefits

A. price cannot be determined

B. an externality exists
C. resources will be allocated inefficiently
D. market production will not be socially optimal
ANSWER: A. price cannot be determined
I assume that you will received 10 utils from your first ice cream cone, 7 utils from the
second, and 3 utils from the third. I am following the assumption of

A. positive marginal utility

B. decreasing utility
C. diminishing marginal utility
D. non-satiation
ANSWER: C. diminishing marginal utility

The economic model of consumer choice does not take into account

A. individual preferences
B. individual goals
C. societal goals
D. constraints faced
ANSWER: C. societal goals

Monopsony refers to

A. a single supplier in the market

B. a single buyer in the market
C. a barrier to entry to the market
D. an important policy tool
ANSWER: B. a single buyer in the market

Asymmetry of information occurs when

A. buyers and sellers are not fully informed

B. it is costly to gather information
C. buyers and sellers have the same information
D. sellers have more information than buyers
ANSWER: D. sellers have more information than buyers

Important aspects of an economic evaluation of a policy include all BUT

A. a viewpoint
B. costs
C. consequences
D. a randomized control trial
ANSWER: D. a randomized control trial
Which economic evaluation method can indicate whether a program is worthwhile?

A. Cost-Benefit Analysis
B. Cost-Effectiveness Analysis
C. Cost-Utility Analysis
D. All types of evaluation
ANSWER: A. Cost-Benefit Analysis

A shadow price

A. is the value of the next best opportunity

B. is always equal to the market price
C. approximates the true average cost
D. approximates true marginal cost
ANSWER: D. approximates true marginal cost

The QALY is used in

A. Cost-Benefit Analysis
B. Cost-Effectiveness Analysis
C. Cost-Utility Analysis
D. All types of evaluation
ANSWER: C. Cost-Utility Analysis

The similarity between Cost-Benefit Analysis, Cost-Effectiveness Analysis and Cost-Utility

Analysis is

A. how the consequences are valued

B. how the consequences are measured
C. how costs are measured
D. how the results are reported
ANSWER: C. how costs are measured

The human-capital approach may be used in

A. Cost-Benefit Analysis
B. Cost-Effectiveness Analysis
C. Cost-Utility Analysis
D. All types of evaluation
ANSWER: A. Cost-Benefit Analysis
_________ is NOT a possible outcome of an economic evaluation

A. Incremental Cost-Effectiveness Ratio

B. Incremental Cost-Utility Ratio
C. Net Monetary Benefit
D. Least Cost Alternative
ANSWER: D. Least Cost Alternative

The social optimum occurs when:

A. total benefits have been maximized.

B. total benefits have been minimized.
C. total costs equal total benefits.
D. marginal costs equal marginal benefits
ANSWER: D. marginal costs equal marginal benefits.

An economic evaluation may be done from any of the following viewpoints EXCEPT

A. society
B. patient
C. evaluator
D. health system
ANSWER: C. evaluator

If an evaluator wanted to place a heavy weight on the considerations of future generations,

they would

A. use a high discount rate

B. use a low discount rate
C. use a moderate discount rate
D. use a discount rate equal to the inflation rate
ANSWER: B. use a low discount rate

____________ refers to the demand for health because an individual derives utility directly
from being healthy

A. Investment demand for health

B. Consumption demand for health
C. Derived demand for health
D. Direct demand for health
ANSWER: B. Consumption demand for health
Canadian data show that the rapidly falling rates of mortality for common diseases occurred:

A. with the introduction of formal education of physicians.

B. before marked increases in living standards were evident.
C. with the introduction of effective medical treatments.
D. before effective medical treatments became available.
ANSWER: D. before effective medical treatments became available.

The education-health gradient

A. finds people of higher levels of education are less healthy, on average, than those of
lower levels of education
B. is a causal relationship
C. indicates that investments in education will increase health
D. finds people of higher levels of education are healthier, on average, than those of
lower levels of education
ANSWER: D. finds people of higher levels of education are healthier, on average, than
those of lower levels of education

The health capital model is:

A. used to measure a person's health status

B. another title for the health capital framework
C. an example of a household production model
D. used to measure society's demand for health care
ANSWER: C. an example of a household production model

The health capital model by Grossman does not include:

A. health stock as an argument in the utility function

B. health providing additional work days
C. health care as an investment in health
D. health care as a direct argument in the utility function
ANSWER: D. health care as a direct argument in the utility function

The start of the era of modern medicine is generally dated by:

A. the introduction of formal medical training.

B. the opening of hospitals to treat patients.
C. the introduction antibiotics.
D. the introduction of surgical procedures.
ANSWER: C. the introduction antibiotics.
The "urban penalty" describes:

A. overcrowding in urban areas relative to rural areas.

B. the squalor in urban areas relative to rural areas.
C. higher mortality rates in urban areas than in rural areas.
D. higher spread of disease in urban areas than in rural areas.
ANSWER: C. higher mortality rates in urban areas than in rural areas.

Researchers believe that the dominant influences on the rapid increase in life expectancy in
19th and 20th centuries were, in chronological order:

A. modern medicine, public health measures and economic growth.

B. public health measures, increase in physicians, discovery of antibiotics.
C. economic growth, public health measures and modern medicine.
D. increased nutrition, increase in physicians, discovery of antibiotics.
ANSWER: C. economic growth, public health measures and modern medicine.

Which statement best describes the demand for health care

A. the demand for health care is similar to the demand for other services
B. the demand for health care is derived from the demand for health
C. the demand for health care is jointly determined with health
D. the demand for health care is independent of income
ANSWER: B. the demand for health care is derived from the demand for health

Which best describes the relationship between life expectancy and income?

A. positive, linear and shifting down over time.

B. positive, curvilinear, and variable across most countries.
C. positive, curvilinear and shifting up over time.
D. positive, linear and variable across most countries.
ANSWER: B. positive, curvilinear, and variable across most countries.

Johnny broke his arm while skiing. He was rushed to the hospital and the arm was repaired.
This generated a

A. selfish externality.
B. negative externality.
C. caring externality.
D. physical externality.
ANSWER: C. caring externality.
Dr. Smith recommends a life saving procedure that he suspects Jimmy would not want. This
is best described as Dr. Smith acting as

A. the patient's agent

B. a perfect patient's agent
C. an imperfect patient's agent
D. the best possible agent.
ANSWER: C. an imperfect patient's agent

Which of the following statement best defines health care?

A. Health care is the set of goods and services provided by health care professionals.
B. Health care is the subset of goods and services primarily intended to maintain or
improve health.
C. Health care includes goods and services delivered by health care professionals with
the primary purpose of improving health and well-being.
D. Health care includes the goods and services delivered by individuals with specialized
medical expertise.
ANSWER: C. Health care includes goods and services delivered by health care
professionals with the primary purpose of improving health and well-being.

Even though Jane is young, she makes sure she gets her flu shot every year. This generates
a:

A. selfish externality.
B. negative externality.
C. caring externality.
D. good-specific externality.
ANSWER: A. selfish externality.

Asymmetry of information exists in all the following cases BUT

A. the physician knows how effective chemo is but the patient does not
B. neither the physician nor the patient know how effective chemo will be
C. the patient is afraid of having chemo but does not tell the physician
D. the physician does not know what the patient is willing to pay for the chemo
ANSWER: B. neither the physician nor the patient know how effective chemo will be
When examining the utilization of physician's services, Mary discovered that there were
many more appendectomies in Smith Falls than in Fergus even though the towns are fairly
similar in other aspects. This result is an example of

A. small area variations

B. differences in need in the two towns
C. inappropriate use of health care in Smith Falls
D. supplier-induced demand
ANSWER: A. small area variations

A need can be shown for many goods such as housing, food and health care. Health care is
different from other goods that we need because

A. health care produces externalities

B. there are limited substitutes for health care
C. health care is a derived demand
D. it is easy to identify the need for health care
ANSWER: B. there are limited substitutes for health care

All BUT _____________ are characteristics of health care that are central to economic
analysis

A. derived demand
B. public externalities
C. uncertainty
D. public insurance
ANSWER: D. public insurance

Chris does not tell his physician that he smokes cigarettes. This creates a situation where

A. need cannot be determined.

B. negative externalities exist.
C. appropriateness cannot be determined.
D. asymmetries of information exist.
ANSWER: D. asymmetries of information exist.

The following statement best describes the derived demand for health care.

A. we derive positive utility directly from the consumption of health care.

B. health care is a secondary good and thus we cannot derive utility from it.
C. we derive positive utility from health which is produced with health care.
D. we derive negative utility from health care as it often causes pain.
ANSWER: C. we derive positive utility from health which is produced with health care.
In a causal model, the demand for health care is not depicted as a function of

A. non-need determinants of demand

B. utilization
C. health status
D. preference
ANSWER: B. utilization

Supplier-induced demand

A.always decreases efficiency because the care is likely not needed or wanted.
B.is often efficient and desirable as patients get care they may not have demanded.
C.is always efficient because only the physician knows what is medically necessary.
D.is often inefficient as patients receive services they could not afford without
insurance.
ANSWER: B. is often efficient and desirable as patients get care they may not have
demanded.

Evidence indicates the demand for health care is

A. perfectly inelastic
B. perfectly elastic
C. inelastic
D. elastic
ANSWER: C. inelastic

In general, the most important determinant of the demand for health care is the individual's

A. preferences
B. health status
C. physician's advice
D. insurance status
ANSWER: B. health status

Utilization of health care is often the starting point for studies into the need and/or demand
for health care because

A. the concepts are interchangeable and utilization is easiest to measure.

B. demand and utilization are equal and need is unobservable.
C. demand and utilization are similar and utilization is easy to measure.
D. utilization is observable and offers information on demand and need.
ANSWER: D. utilization is observable and offers information on demand and need.
Evidence indicates that the income elasticity of demand for health care is

A. inelastic at the individual level and more elastic at the aggregate level
B. inelastic at the individual and inelastic at the aggregate levels
C. elastic at the individual level and more elastic at the aggregate level
D. elastic at the individual level and less elastic at the aggregate level
ANSWER: A. inelastic at the individual level and more elastic at the aggregate level

The need for health care depends on an individual's

A. preferences.
B. budget constraint.
C. health status.
D. price.
ANSWER: C. health status

The Rand experiment indicated the demand for outpatient care ________ demand for
inpatient care.

A. is more elastic than the

B. is less elastic than the
C. has the same elasticity as the
D. cannot be compared to the
ANSWER: A. is more elastic than the

The __________ health care depends on preferences, budget constraint, price, supply
factors.

A. demand for
B. need for
C. availability of
D. utilization of
ANSWER: D. utilization of

James was feeling ill but did not visit his physician because he was pretty sure his physician
would prescribe a medication. This suggests:

A. over the counter drugs and prescription drugs are substitutes

B. James is worried about supplier induced demand
C. physician visits and prescription drugs are compliments
D. physician visits and over the counter drugs are substitutes
ANSWER: C. physician visits and prescription drugs are compliments
John and Jane's boss offers a reward for their hard work. He offers to give them each $10.00
or flip a coin and give the winner $20.00. John wants to take the $10.00 but Jane wants the
chance to win the $20.00. She is:

A. risk averse
B. risk neutral
C. risk loving
D. greedy
ANSWER: C. risk loving

Are insurance companies likely to offer insurance at an actuarially fair price?

A. No, they are trying to maximize profits so will charge more.

B. No, they have loading costs so will likely charge more.
C. No, they are greedy and want to charge as much as they can.
D. Yes, they have to or no one will buy insurance.
ANSWER: B. No, they have loading costs so will likely charge more.

Molly's friends have noticed she is not nearly as protective of her laptop since she bought
damage insurance for it. This is an example of:

A. risk pooling
B. adverse selection
C. moral hazard
D. risk reduction
ANSWER: C. moral hazard

Which of the following statements is correct:

A. The effectiveness of insurance does not depend on the size of the risk pool.
B. The actuarially fair insurance price does not depend on a person's degree of risk
aversion.
C. A risk loving person will have a higher risk premium than a risk averse person
D. The smaller a person's degree of risk aversion is, the larger will be their welfare gain
from insurance.
ANSWER: B. The actuarially fair insurance price does not depend on a person's
degree of risk aversion.
Martha must choose between two treatments. Both treatments have the possibility of side
effects. Treatment A has a 10% chance of nausea and a 20% chance of headache.
Treatment B has a 20% chance of nausea and a 10% chance of headache. Technically
Martha's choice involves:

A. a lottery
B. uncertainty
C. limited information
D. risk
ANSWER: D. risk

John's family belongs to a community where members have agreed to bring in the harvest of
anyone who falls ill and cannot do it. This is an example of:

A. risk pooling
B. resource pooling
C. self-insurance
D. compensation
ANSWER: A. risk pooling

All but the following factor must be present for risk pooling to be effective:

A. a large number of members in the pool

B. members must pay premiums
C. members' risks must not be correlated
D. the expected loss is fixed
ANSWER: B. members must pay premiums

John and Jane's boss offers a reward for their hard work. He offers to give them each $10.00
or flip a coin and give the winner $20.00. John wants to take the $10.00 but Jane wants the
chance to win the $20.00. The expected payout is:

A. $10.00 for both John and Jane.

B. $20.00 for both John and Jane.
C. $10.00 for John and $20.00 for Jane.
D. Zero for John and $20.00 for Jane.
ANSWER: A. $10.00 for both John and Jane.
Mary applied for extended health insurance. The company asked her many questions about
her age, how much she misses work, how much she drank, how much she smoked and
whether or not she visited her family physician on a regular basis. The insurance company is
trying to:

A. collect as much information as possible to perfectly determine the actuarially fair

premium.
B. collect as much information as possible on the likelihood of moral hazard.
C. collect as much information as possible about observable characteristics to risk
adjust.
D. collect as much information as possible so no asymmetries of information exists.
ANSWER: C. collect as much information as possible about observable
characteristics to risk adjust.

John lives in the US and decides to buy health insurance even though he is very healthy
because he could never afford to pay for a surgical procedure if it became necessary. John
is buying insurance due to:

A. risk aversion
B. loss aversion
C. access motive
D. framing effects
ANSWER: C. access motive

Which of the following is not a basic health care financing option:

A. Direct payments
B. Private insurance premiums
C. Social insurance contributions
D. None of the above
ANSWER: D. None of the above

In a voluntary, parallel private system of health care finance, providers have a number of
incentives. Which of the following is not one:

A. Act strategically to manipulate waiting lists

B. Cream skim the types of services to provide
C. Only provide services in the private sector
D. Practice risk selection
ANSWER: C. Only provide services in the private sector
Risk-adjusted capitation payments are an attempt to avoid:

A. Moral hazard on the part of the patient

B. Increasing health care expenditures by the financial intermediary
C. Inequity in providing services to high- and low-income patients
D. Cream skimming on the part of providers
ANSWER: D. Cream skimming on the part of providers

Tax expenditures are:

A. Forgone tax revenue associated with a tax credits or tax breaks

B. Monies spent on health care out of general tax revenue
C. Expenditures by government to collect tax revenue
D. None of the above
ANSWER: A. Forgone tax revenue associated with a tax credits or tax breaks

Health care financing is a core activity of every health care system. Which of the following is
not a function of health care financing?

A. Who bears the burden of paying for health care

B. Who has access to health care
C. Where health care dollars are allocated
D. How well a jurisdiction is able to control health care expenditures
ANSWER: C. Where health care dollars are allocated

Health care funding is a core activity of every health care system. Which of the following is
not a result of health care funding?

A. Financial incentives regarding provision

B. Where the services are provide
C. Whom services are provided
D. How a jurisdiction raises money for the health care system
ANSWER: D. How a jurisdiction raises money for the health care system

In most health care settings, health care insurers must attempt to provide the correct
incentives so that health care providers produce health care in the most efficient manner.
This is an example of:

A. the free rider problem

B. the autonomy problem
C. inefficiencies of insurance
D. the principal-agent problem
ANSWER: D. the principal-agent problem
There are a number of parties involved in the exchange of health care. Which of the
following is not always present?

A. Government
B. Patients
C. Providers
D. None of the above
ANSWER: A. Government

Jim's employer must pay worker's compensation premiums. This is best described as

A. tax revenues
B. tax expenditures
C. private insurance premiums
D. social insurance contributions
ANSWER: D. social insurance contributions

All funding schemes include the following basic questions EXCEPT:

A. Who is being paid

B. What is being paid for
C. Why are they being paid
D. What is the unit of funding
ANSWER: C. Why are they being paid

The market for general practitioner services is

A. perfectly competitive
B. different from the market for specialists
C. locally competitive
D. fee-for-service payment
ANSWER: B. different from the market for specialists

In Canada, recently the predominant mechanism of funding for physician services is

A. capitation
B. fee-for-service
C. salary
D. mixed methods of funding
ANSWER: B. fee-for-service
A physician's utility function is typically modeled

A. like an owner-operated business

B. in the standard manner but include ethics
C. in the standard manner but includes practice style
D. in the standard manner but includes a production function
ANSWER: B. in the standard manner but include ethics

Recent evidence indicates that:

A. the majority of physicians are females

B. the average age of physicians is close to 65 years
C. the number of services/physician has decreased on average
D. physicians have, on average, reduced their working hours per week
ANSWER: D. physicians have, on average, reduced their working hours per week

Physician incomes are

A. too low and thus Canada has a shortage of physicians

B. about the same as other professionals but more regulated
C. well above the average the averageearnings of other Canadians
D. have been falling over time and thus Canada has a shortage of physicians
ANSWER: C. well above the average the average earnings of other Canadians

Under the target-income model, it is expected that price controls will lead physicians to
provide _________ services and ___________ intensive medical care.

A. less; less.
B. less; more.
C. more; less.
D. more; more.
ANSWER: D. more; more.

Generally speaking, physicians are regulated by

A. the federal government

B. the colleges
C. themselves
D. the provincial government
ANSWER: C. themselves
Most physician models are developed within a

A. standard framework
B. household production framework
C. human capital framework
D. framework that models physician and practice separately
ANSWER: B. household production framework

A physician's implicit wage is

A. the opportunity cost of the next best wage

B. the revenues from their practice divided by hours worked
C. the net income from their practice divided by hours worked
D. total income divided by the hours worked
ANSWER: C. the net income from their practice divided by hours worked

The McGuire-Pauly synthesis examines the impacts of lowered profit rates. The _______
effect suggests lowered profit would tend to reduce inducement, while the _______ effect
suggests lowered profit would increase inducement.

A. income; substitution.
B. substitution; income.
C. income; information.
D. target income; substitution.
ANSWER: B. substitution; income.

Although drug regulations are aimed at protecting consumers, they may reduce innovation
because the increased testing:

A. imposes higher costs.

B. increases the time for drugs to come to market.
C. eliminates "orphan" drugs from the market.
D. answers a. and b. are correct.
ANSWER: D. answers a. and b. are correct.

The following statement best describes models that treat hospitals as doctors' workshops
A.
B. doctors are in charge of the hospital and maximize income
C. doctors are in charge of the hospital and maximize patient outcomes
D. doctors under-invest in non-medical inputs because they are maximizing their income
E. there is no incomplete vertical integration as doctors are in charge of everything
ANSWER: A. doctors are in charge of the hospital and maximize income
Drug formularies:

A. help manufacturers determine which drugs are efficacious.

B. help salesmen determine what to sell.
C. determine which drugs will be covered by third-party payers.
D. Answers b. and c. are correct.
ANSWER: C. determine which drugs will be covered by third-party payers.

The hospital sector

A. spending continues to increase as a proportion of total health care expenditures

B. has seen an increase in out-patient services due to decreasing investment in
hospitals
C. comprises the largest component of the health care system
D. has seen a decrease in the number of beds and thus in services provided
ANSWER: C. comprises the largest component of the health care system

Research suggests generic drugs have had less market penetration, and less success in
containing costs because:

A. physicians often have little incentive to use them.

B. manufacturers will not produce them.
C. consumers do not wish to use them.
D. insurers will not pay for them.
ANSWER: A. physicians often have little incentive to use them.

The hospital sector is dominated by

A. for profit organizations

B. not-for-profit organizations
C. not-only-for profit organizations
D. charitable organizations
ANSWER: B. not-for-profit organizations

An internal market approach

A. aims to create competition within specific geographic areas

B. is only available within a private system which allows competition
C. aims to keep purchases and providers from splitting
D. is often limited by political interference
ANSWER: D. is often limited by political interference
In North America it is typical for physicians to work in hospitals but not be employed by them.
This is a form of

A. vertical integration
B. horizontal integration
C. incomplete horizontal integration
D. incomplete vertical integration
ANSWER: D. incomplete vertical integration

Expenditures on pharmaceuticals

A. are the highest proportion of health care expenditures

B. have been steadily growing over the last two decades
C. are not a policy concern because they are not publicly funded
D. are a policy concern because they create spillover to research and development
ANSWER: B. have been steadily growing over the last two decades

Research and development in the pharmaceutical industry is generally undertaken by

A. Brand name drug manufacturers

B. Generic drug manufacturers
C. the government
D. private research institutions
ANSWER: A. Brand name drug manufacturers