York University Health Economics Test PDF

Student Number: YORK UNIVERSITY DEPARTMENT OF ECONOMICS AP/ECON 3510 3.0 SECTION M HEALTH ECONOMICS TEST #1 INSTRUCTOR:...

Student Number: YORK UNIVERSITY DEPARTMENT OF ECONOMICS AP/ECON 3510 3.0 SECTION M HEALTH ECONOMICS TEST #1 INSTRUCTOR: Wed. Feb. 10th Professor N. Buckley 50 Minutes(11:30pm-12:20pm) LOCATION: SLH A NAME: ___________________________ ________________________________ LAST NAME FIRST NAME STUDENT NUMBER: _____________________________________________ SIGNATURE: _____________________________________________ INSTRUCTIONS: Make sure to print your NAME, STUDENT NUMBER and SIGN the sheet above to acknowledge you had read these instructions. Write your student number at the top right of each page. You can use pen or pencil (random tests will be photocopied before handed back to prevent answers from being changed after they are handed back). Basic non-programmable calculators are allowed, although you should not need one. No other electronic devices are allowed. Make sure these (cell phones etc.) are all turned off and safely stored away, otherwise you will be in breach of the academic honesty code. You have 50 minutes to answer all 12 questions. Questions will be either multiple choice, true/false/why or short answer format. For multiple choice answers, no work needs to be shown. The full marks will be granted if the best answer is circled and zero otherwise. For true/false/why and short answer questions, grading will be based on the quality of your explanation. Make sure to show all your work, part marks will be granted. It is a good idea to state the meaning of any relevant technical terms. Be concise and clear, the allotted space is adequate to provide a good answer. In all cases your answers should emphasize and discuss the questions from an economic perspective using concepts discussed in the lectures and notes. Your answers should reflect what a thoughtful health economist would say about these issues. Although not required, feel free to draw diagrams to help answer questions. 1  Student Number: 1. [2 marks] Which aspect of the health care system is primary responsible for raising revenues and determining who bears the burden of paying for health care: a) Delivery b) Financing c) Funding d) Efficiency 2. [2 marks] The 5 named criteria necessary under the Canada Health Act include all of the following EXCEPT which one? a) Portability b) Equity c) Universality d) Public Administration 3. [2 marks] Which of the following statements regarding the Pareto Criterion is TRUE? a) It implies that indifference curves further from the origin are preferred to indifference curves closer to the origin b) It is the reason that demand curves are downward sloping c) It is used as a possible way to determine allocative efficiency d) It says that making someone worse off is okay as long as you make someone else better off by more 4. [2 marks] A tax on cigarettes will raise the price of cigarettes which will cause a reduction in the demand for cigarettes. a) This is a “Positive” economic statement. b) This is a “Normative” economic statement. c) This is neither a “Positive” nor a “Normative” economic statement. d) This is both a “Positive” and “Normative” economic statement. 5. [2 marks] Which of the following does NOT account for the reason that a demand curve is downward sloping: a) The law of demand b) Diminishing marginal utility c) A negative externality d) None of the above 2  Student Number: 6. [2 marks] Which of the following statements regarding “budget constraints” from microeconomic theory is NOT TRUE? a) Budget constraints show how much a person can afford b) Budget constraints depend on the prices of goods c) Budget constraints are downward sloping d) Budget constraints are curved (bowed inward) for most people 7. [2 marks] McKeown showed that majority of historically rapidly falling rates of mortality for common diseases occurred: a) Before marked increases in living standards were evident b) Before the invention of modern medicine became available c) With the introduction of effective medical treatments d) With the introduction of formal education of physicians 8. [2 marks] According to the standard Grossman model of demand for health capital that uses the concept of the marginal efficiency of investment (MEI), when a person receives a wage or income increase which of the following is FALSE? a) The person’s marginal cost r+d line shifts downwards b) The person will choose a higher level of health stock c) The person has a higher value of healthy days d) The person’s MEI curve will shift to the right 9. [6 marks] Canada’s health care system is predominantly publicly financed and publicly delivered. True False Why? False. The activity of raising revenues to pay for health care is called “health care financing”. Health care is publicly financed in Canada through taxation. Health care delivery refers to the physicians, hospitals, pharmacies etc. that provide health care services to the population. However, since physicians that work in family practices and hospitals and pharmaceutical firms are private in nature in this country (most are not government workers) health care delivery in Canada is predominantly private, not public. 3  Student Number: Health Area Actual Allocation Needs-based Allocation ($ per person) ($ per person) Downtown 972 952 Uptown 620 587 Suburb 722 951 Rural 619 712 10. [6 marks] Assume that the table above is an excerpt from a report comparing the actual allocation of health care funds to estimates of what the funding allocation should be based on need. Using the above table, what can be inferred regarding the distributional equity of actual allocations in the districts? Downtown and Suburbs both need approximately the same amount of funds (952 and 951) however Downtown actually receives a lot more (972 vs. 722) therefore there is horizontal inequity (horizontal equity not met since equals are not treated equally). Also Rural needs more than Uptown (712 vs. 587) however both actually receive approximately the same amount (620 and 619) therefore there is also vertical inequity (vertical equity is not met since unequals are not treated unequally). 11. [6 marks] 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 cost of supply. True False Why? False. The social gradient in heath refers to the fact that inequalities in population health status are related to inequalities in social status (due to difference in socioeconomic factors and occupation/job types). A good example of this is the fact that civil workers in higher status job positions have been found to have better health and lower mortality rates. There is a social cost curve that lies above the private cost curve and that takes all of societies costs into account but that is if there is an externality involved and has nothing to do with the social gradient. 4  Student Number: 12. [9 marks] Suppose a Canadian health policy maker finds an academic journal article that reports the following statistical regression of income and education on health status based on a very recent random sample of Canadian individuals. According to the regression results below, would public policies that increase individual education levels be expected to lead to increases in individual health levels? Discuss from the point of view of a knowledgeable health economist [Feel free to answer in paragraph form or in point form using issues and terminology discussed in class and how they pertain to the link between education and health that is estimated in question]. Dependent Variable: Health Status [=1 for High/Good Health, =0 for Low/Poor Health] Independent Variable Name: Odds Ratio: P-Value: Education (# of years) 0.4 0.01 Income ($) 1.65 0.000 *Note: R-squared = 0.85 Below are some of the pertinent points that could be raised to answer the question “would public policies that increase individual education levels lead to increases in individual health levels?”. One not need mention all to get 9 out of 9. -The odds ratio for Education is below 1.0 so it is negatively correlated with Health, if anything higher education levels are associated with lower health statuses, not the other way around as suggested in the question. {This is a slightly odd finding since it goes against the common findings mentioned in class} -The negative correlation found between Education and Health is significant since p-value is