Test #2 Class Practice Questions

Which of the following is not a commonly recognized means of economic evaluation in the case of health care?

QALYs are a means of quantifying the benefits of a medical intervention that takes both the quantity and quality of life lived into account. QALYs are used in which type of economic evaluation?

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

Cost-effectiveness analysis is poorly suited for programs with multiple types of health outcomes.

A recent study by Health Canada, the federal Department of Health, that calculated the economic burden imposed by leading diseases in Canada (e.g., health care costs, lost work productivity, etc.) constitutes an economic evaluation.

Economists generally recommend that economic evaluations be conducted from the viewpoint of all members of society.

Because it incorporates a subjective utility weight into the calculation of quality-adjusted life-years, cost-utility analysis can address questions of allocative efficiency.

Other things equal, the higher is the rate of time preference, the more attractive will investments in prevention programs be from an economic point of view.

The use of the net-benefit measure to summarize the results of a cost-benefit study follows directly from the Pareto efficiency principle.

Health economists believe that the relevant aspect of health is

Focusing on your total product of health due to health care, moving to a new area with less industrial pollution will likely

McKeown showed that majority of historically rapidly falling rates of mortality for common diseases occurred

More education is correlated with better health because people with “long time horizons” with preferences for the future tend to invest in both. Therefore we should increase subsidies to education in order to increase health.

The concept of the social gradient in health means that there exists a social cost curve which lies above the private marginal cost curve (commonly known as the supply curve) which shows the full true cost of supply.

Give an example of how health might be produced from a market good. Give an example of how health might be produced from a non-market good.

Uncertainty regarding the effectiveness of a specific health service for a particular individual:

Informational asymmetry in the market for health care services refers to:

Which of the following characteristics of health care plays an important role in defining need:

Because health care consumers often do not know what would have happened to their condition even if they had not consumed a particular health care service:

The increasing number of antibiotic resistant bacteria caused by over-consumption of antibiotics is an example of:

Which of the following is a reason why some health economists argue that we should not interpret the area under the demand curve for health care as representing the value of health care to an individual?

The demand for hospital care is generally:

The Rand Health Insurance Experiment found that the consumption of physician visits did respond negatively to cost-sharing while the expected total cost of visits did not. This would be consistent with the phenomenon of:

The problem of informational asymmetry in health care markets can undermine the normative interpretation of the demand curve as representing marginal benefit.

If a doctor is a perfect agent for her patients, she will always provide care that is expected to improve a patient's health.

The physician's ability to influence a person's consumption of health care services arises from externalities.

The concept of need in health care derives from the presence of externalities in health care markets.

If we define a health care service as needed if the expected health effect for a person is positive, then society should ensure that all health care needs are met.

The demand curve for health care provides a good measure of the benefits of health care to a consumer.

There is a large health care literature that examines variation across regions in the per-capita utilization of health care services. Such studies consistently find that rates of variation of many procedures can vary 2-5 fold even after adjusting for differences in the age-sex distributions of the population. Many studies also find that utilization per capita is positively correlated with physician supply. The most logical explanation of these findings is self-interested supplier-induced demand.

Even when care is free at the point of service, we would expect low and high-income individuals with the same level of need to demand different quantities of health care.

For two individuals who have identical probabilities of being ill and identical monetary losses associated with being ill, but who have differing risk preferences:

A new drug has been developed that is effective in preventing heart attacks. Before the new drug was developed, an average 55-year-old man had a 20% chance of a heart attack and the loss associated with the attack was $4000. Taking the drug reduces the chance of a heart attack to 10%, but the loss associated with the attack increases to $8000. All else equal, if a 55-year-old man begins taking the new drug, the maximum premium he would be willing to pay for health insurance to cover the loss associated with a heart attack:

The effectiveness of pooling financial risk through insurance:

A risk-averse individual prefers all situations with certainty compared to a risky prospect.

If an insurance company charges more than the actuarially fair premium, people will not buy insurance.

Risk aversion is a necessary condition for insurance to be welfare improving to an individual.