1. With regard to health care spending patterns, we can say that
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A. Everybody demands the same basic level of health care
B. Health care spending varies dramatically according to governments willingness to pay for such services
C. Men demand much more medical care than women
D. The elderly need much less health care than adults do
E. Only a few people (less than 5 percent) consume more than half of all health care expenditures
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2. Which of the following is the best example of a renewable resource?
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A. Crude petroleum
B. The ozone layer in the atmosphere
C. Library book
D. Minerals
E. Trees
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3. All of the following are reasons for health care expenditures in the U.S. Rising EXCEPT
A. The government (FDA) restricts entry of drugs to the U.S. Marketplace
B. The demand for health care has risen
C. The federal government has had such a small role in health care
D. The supply of physicians is restricted by the American medical association
E. Health insurance is regulated on a state by state basis so someone cannot buy a less expensive policy from an insurer in another state
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4. Free market economists argue that
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A. Markets will not adjust to a demand shock without government intervention
B. Markets will adjust to a demand shock without government intervention
C. Central planners are best equipped to handle external shocks and get the economy back on track
D. It would take the government too long to intervene and get the economy back on track
E. Government intervention is necessary to get the economy back on track
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5. True or false? The health care restrictions and regulations prevent the entry and exit of firms and prevent the effect of competition on prices.
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6. True or false? In a market system, those who own the most highly valued resources have the highest incomes.
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7. True or false? Since consumers do not have to choose whether to use their own money for health care or for something else, the role of price as an allocation mechanism does not work in health care.
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8. Health economics is important to study for all of the following reasons EXCEPT
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A. Spending on health care in the U.S. exceeds $2 trillion
B. The elderly are the smallest users of health care, and the young are the major users
C. Only 1% of the population account for almost 30% of total health care expenditures
D. Health care expenditures have risen from 5.9% of GDP in 1965 to over 16% of GDP today
E. None - all of these are true
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9. An illegal drug dealer will maximize profit by providing and selling the number of drugs where
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A. Private costs equal social costs
B. The greatest number of consumers can be derived
C. The price is maximized
D. Private property rights are best defined
E. Marginal revenue equals marginal cost
