Health Economics - practice test Flashcards - Cram PDF

Preview

Summary

This is practice material for ECON 3510. It is really useful and might be the kind of thing they give you on the exams....

Description

Health Economics - practice test Flashcards - Cram.com

2021-12-13, 3 :48 PM

Home Flashcards Create Flashcards Essays Essay Topics Writing Tool

Flashcards FlashCards Essays Search over 166 million flas

Create Flashcards Sign in

Flashcards » Health Economics - practice test

Related Flashcards

Health Economics - Practice Test by mishadaukas, May 2014 Subjects: econ health

Flashcards

Economics Exam One [?]

Memorize

Test

Games

Related Essays Resource Allocation In Health Care Limited resources for health should be allocated to maximize the health benefits for the population served… and should be equitable or just; equity is concer...

Living Standards And Economic Growth The main points of this issue deal with productivity, living standards, and economic growth. The issue discusses two productivities: labor and multifactor wh...

CARD RANGE TO STUDY 1

through

35

Click or Press Spacebar to Begin »

Use LEFT and RIGHT arrow keys to navigate between flashcards; Use UP and DOWN arrow keys to flip the card; H to show hint; A reads text to speech;

https://www.cram.com/flashcards/health-economics-practice-test-4760178

Page 1 of 10

Health Economics - practice test Flashcards - Cram.com

2021-12-13, 3 :48 PM

Share

35 Cards in this Set

Front

Print

Export

Clone

Back

define perfect competition (5)

define asymmetry of information (3)

1. profit maximization 2. homogenous product 3. multiple producers and consumers - everyone is a pricetaker 4. free entry and exit 5. u shaped cost curves

1. one party in exchange has more information regarding consumption or production attributes than the other party --> 2. trading advantage 3. give a health care example: a. physicians in health care b. consumer in insurance

define moral hazard (4)

1. third party payment environment, eg ins sector 2. ex post 3. hidden action on behalf of consumer/producer -> true reimbursement not returned 4. health care example: a. supplier induced demand

law of diminishing returns to factors of production

1. assoc c SR 2. fixed factor + increasing variable factor: initial marginal increase in production, but will eventually fall

why is demand curve downward sloping?

1. ceteris paribus - holding all other factors, including income, constant 2. as price decreases, more consumers will switch expenditures and purchase more of the commodity

why is supply curve upward sloping?

https://www.cram.com/flashcards/health-economics-practice-test-4760178

1. ceteris paribus - holding all other factors constant 2. as price increases, producers will be able to cover higher marginal costs of production and therefore produce more

Page 2 of 10

Health Economics - practice test Flashcards - Cram.com

2021-12-13, 3 :48 PM

define consumers surplus

1. CS - area under demand curve bounded by the market price 2. represents the difference between consumers' willingness to pay and the actual price paid 3. monetarized measure of welfare gain to consumers

define producers surplus

1. area above the supply curve bounded by market price 2. represents the difference between producers' willingness to supply various levels of commodity at various levels of marginal cost and the actual price recived 3. monetarized measure of welfare gain to producers

relationship between total utility and marginal utility

1. total utility = total amount of utility acquired by consumers for diff levels of consumption 2. marginal utility = increase/decrease in total utility acquired by consuming an additional unit of commodity 3. therefore, marginal utility is the rate of change in total utility at different points of consumption

preconditions for efficient market allocations: demand side

DEMAND side failures: 1. well established property rights for trading to take place 2. ranked, consistent preferences, rational behav 3. full information 4. "more is not better?) 5. many consumers - price tarkers

preconditions for efficient market allocations of resources: DEMAND side

https://www.cram.com/flashcards/health-economics-practice-test-4760178

SUPPLY side failures: 1. technology well known and established 2. factor prices known 3. no natural monopoly - many producers, no barriers to entry 4. market prices known 5. no externalties 6. no public goods 7. perfect information, especially with risk and uncertainty

Page 3 of 10

Health Economics - practice test Flashcards - Cram.com

market failures in health care

agency relationship in health care

https://www.cram.com/flashcards/health-economics-practice-test-4760178

2021-12-13, 3 :48 PM

1. information assymetry: a. producer has more info than consumer b. uncertainty and complexcity increases informational assymmetry, greater specialization greater monopoly c. little specification of preferences and demand curve -> agency relationship --> supplier induced demand 2. production process not well specified - even for agent 3. market prices != f(x) a. true opportunity costs b. true demands 4. monopoly power - barriers to entry 5. third party payment - supplier induced demand moral hazard 6. externalities - ppl care about others health care

1. assymetry of info by consumer/pt a. info re: health status (dg) b. info re: avail rxs (rx) c. info re: efficacy of rxs (prog) 2. rely on producer/MD to specify their preferences and their demands - particularly b/c healthcare is not an experience good 3. supplier-induced demand - physician is producer and agent on behalf of consumer to define consumption levels 4. producer holds monopoly power a. acquisition of info b. barriers to entry 5. without effective demand, only constraint on monopoly = a. recourse to law b. self-regulation via medical ethics 6. agent may be perfect or imperfect a. inadequate info i. medical knowledge ii. knowledge of pt's circumstances iii. knowledge of pt's indiv preferences b. exploit info asymmetry to maximize their own utility c. eg supplier induced demand = pts encouraged to consume health care of little or no benefit on the recommendation of healthcare providers who then receive a fee (inefficient resources allocation)

Page 4 of 10

Health Economics - practice test Flashcards - Cram.com

Can the agency relationship ever be "perfect"?

What incentive mechanisms exist to ensure that the quantity of healthcare is efficient?

define price elasticity of demand

https://www.cram.com/flashcards/health-economics-practice-test-4760178

2021-12-13, 3 :48 PM

1. production process characterized by stochastic outcomes a. same inputs -> diff outcomes b. cannot observe agent's effort 2. efficient quantity of health care a. perfect agent to pt (private efficiency): would deliver quantity of healthcare to marginal benefit = 0 (third-party payer system without copayment) b. perfect agent to allocate resources (social efficiency): would deliver quantity of health care to marginal benefit = marginal cost c. physician's utility may not exclusively maximize patients' interests: i. MD income ii. hospital surplus

1. if MD utility f(x) from patients' interests + other stuff system of incentives could be devised to produce efficient quantity of health care 2. socially efficient level is MC = MB 3. retrospective payment - MD would ignore MC and treat until MB = 0 4. prospective payment (full or partial) + MD appropriately trades off resource costs with pt benefits - produce health care quantity MC = MB 5. HOWEVER, if quality of care is introduced, AND, it is a multidimensional issue, than this incentive system may not work

1. measure of responsiveness of quantity demanded to change in price of same good 2. price elasticity = abs value of (% change in quantity demanded)/(% change in price) 3. elastic: price elasticity > 1 4. inelastic: price elasticity < 1

Page 5 of 10

Health Economics - practice test Flashcards - Cram.com

define difference between avg total cost and marginal cost

marginal rate of substitution

2021-12-13, 3 :48 PM

1. avg total cost a. = total cost per unit of output b. TC/q produced 2. marginal cost a. cost of producing an extra unit of output b. rate of change of TC/output increased/decreased by one unit

1. rate at which one commodity can be substituted for another without change in total utility 2. marginal rate of substitution is given by the slope of a consumer's indiff curve

indiv's demand curve demonstrates

quantity of commodity which the consumer would be willing to purchase at given price

what does a shift in the demand curve signify

1. change in something other than the price of the commodity has change leading to increase or decrease in demand 2. eg consumer tastes or income

preconditions for efficient market allocations of resources: DEMAND side

SUPPLY side failures: 1. technology well known and established 2. factor prices known 3. no natural monopoly - many producers, no barriers to entry 4. market prices known 5. no externalties 6. no public goods 7. perfect information, especially with risk and uncertainty

market failures in health care

https://www.cram.com/flashcards/health-economics-practice-test-4760178

Page 6 of 10

Health Economics - practice test Flashcards - Cram.com

2021-12-13, 3 :48 PM

1. information assymetry: a. producer has more info than consumer b. uncertainty and complexcity increases informational assymmetry, greater specialization greater monopoly c. little specification of preferences and demand curve -> agency relationship --> supplier induced demand 2. production process not well specified - even for agent 3. market prices != f(x) a. true opportunity costs b. true demands 4. monopoly power - barriers to entry 5. third party payment - supplier induced demand moral hazard 6. externalities - ppl care about others health care

agency relationship in health care

1. inadequate info by consumer/pt to specify dg, rx, prog 2. rely on producer/MD to specify their preferences and their demands - particularly b/c healthcare is not an experience good 3. supplier-induced demand - physician is producer and agent on behalf of consumer to define consumption levels 4. producer holds monopoly power a. acquisition of info b. barriers to entry 5. without effective demand, only constraint on monopoly = a. recourse to law b. self-regulation via medical ethics

Can the agency relationship ever be "perfect"?

1. production process characterized by stochastic outcomes a. same inputs -> diff outcomes b. cannot observe agent's effort 2. efficient quantity of health care a. perfect agent to pt (private efficiency): would deliver quantity of healthcare to marginal benefit = 0 (third-party payer system without copayment) b. perfect agent to allocate resources (social efficiency): would deliver quantity of health care to marginal benefit = marginal cost c. physician's utility may not exclusively maximize patients' interests: i. MD income ii. hospital surplus

https://www.cram.com/flashcards/health-economics-practice-test-4760178

Page 7 of 10

Health Economics - practice test Flashcards - Cram.com

What incentive mechanisms exist to ensure that the quantity of healthcare is efficient?

define price elasticity of demand

difference between avg total cost and al cost

marginal rate of substitution

indiv's demand curve demonstrates

t does a shift in the demand curve signify

https://www.cram.com/flashcards/health-economics-practice-test-4760178

2021-12-13, 3 :48 PM

1. if MD utility f(x) from patients' interests + other stuff system of incentives could be devised to produce efficient quantity of health care 2. socially efficient level is MC = MB 3. retrospective payment - MD would ignore MC and treat until MB = 0 4. prospective payment (full or partial) + MD appropriately trades off resource costs with pt benefits - produce health care quantity MC = MB 5. HOWEVER, if quality of care is introduced, AND, it is a multidimensional issue, than this incentive system may not work

1. measure of responsiveness of quantity demanded to change in price of same good 2. price elasticity = abs value of (% change in quantity demanded)/(% change in price) 3. elastic: price elasticity > 1 4. inelastic: price elasticity < 1

1. avg total cost a. = total cost per unit of output b. TC/q produced 2. marginal cost a. cost of producing an extra unit of output b. rate of change of TC/output increased/decreased by one unit

1. rate at which one commodity can be substituted for another without change in total utility 2. marginal rate of substitution is given by the slope of a consumer's indiff curve

quantity of commodity which the consumer would be willing to purchase at given price

1. change in something other than the price of the commodity has change leading to increase or decrease in demand 2. eg consumer tastes or income

Page 8 of 10

Health Economics - practice test Flashcards - Cram.com

what does a supply curve show?

what is an externality?

2021-12-13, 3 :48 PM

1. demonstrates the quantity of a commodity which is being offered for sale at each price 2. can be constructed for indiv supplier or for industry as a whole

1. external cost or benefit 2. impact arising from an economic transaction which is experienced by parties not directly involved in the transaction

is perfect competition feasible in health care sector?

1. define perfect competition a. many buyers and sellers - price takers b. homogenous good c. perfect info d. no barriers to entry or exit e. profit maximization 2. perfectly competitive equilibrium discussed with graph 3. Market failures in health care setting: define, and effect on health care would be considered a. uncertainty over timing and financing of health care expenditures b. imperfect knowledge (dg, rx, prog) c. moral hazard (supplier induced demand - no financial impediment to curtail over consumption) d. monopoly (barrier to entry into medical profession, increasing returns of specilization) e. not-profit maximizing objectives (not-costminimising behav)

decribe failures in providing private health care efficiently

1. insurance markets and health care: uncertainty re: timing and magnitude of health care expenditures 2. actuarial model Pr = p*C premium = (probability)(compensation) 3. failures a. adverse selection - bad risks do not declare true risk and drive good risks from market as premiums are increased to cover insurer's losses under such circumstances b. consumer moral hazard - consumers have hidden action of over consumption as financial burden carried by insurer c. producer moral hazard - agents over-consume as they make resource decisions but carry no financial risk d. probability of illness not independent

https://www.cram.com/flashcards/health-economics-practice-test-4760178

Page 9 of 10

Health Economics - practice test Flashcards - Cram.com

2021-12-13, 3 :48 PM

using examples, explain how health care resources out to be allocated under conditions of scarcity

Page

1 of 1 | Showing

1. market failure in the health care sector a. uncertainty -> demand for ins b. failure of ins market to provide efficient funding (moral hazard, adverse selection) c. difficulty in specifying production and cost relationships d. economic evaluation in health care

cards per page

Cram has partnered with the National Tutoring Association

Ready To Get Started?

Create Flashcards

Claim your access

Discover

Company

Follow

Create Flashcards

About

Facebook

Mobile Apps

FAQ

Twitter

Support Legal Accessibility

©2021 Cram.com

Privacy Policy

CA Privacy Policy

https://www.cram.com/flashcards/health-economics-practice-test-4760178

Site Map

Advertise

CA Do Not Sell My Personal Information

Page 10 of 10...