1. Managed care __________ hospital utilization; their growth rate in spending is __________ than most FFS plans.

A. increases; lower

B. increases; higher

C. reduces; higher

D. reduces; similar

2. Harris's model of hospital behavior is characterized as:

A. perfect competition.

B. an oligopoly game.

C. monopolistic competition.

D. pure monopoly.

3. Holtmann and Idson looked at nurses' wages. They found that nurses in nonprofit nursing homes earned:

A. more than colleagues in for-profit homes because they were overpaid for their talents.

B. less than colleagues in for-profit nursing homes because they did not demand high wages.

C. more than colleagues in for-profit homes because they had more experience.

D. more than colleagues in for-profit homes because they had monopoly bargaining power.

4. The effect of state health insurance benefit mandates on employment is similar to __________ in that unemployment __________.

A. the minimum wage; increases

B. the minimum wage; decreases

C. price ceilings; increases

D. rent control; decreases

5. Imperfect information has led for some economists to expect __________ in health care than in more competitive markets.

A. higher quality

B. lower quality

C. more price dispersion

D. less price dispersion

6. Suppose that Hospital 1 faces demand and marginal revenue curves given by P₁ = 200 - 2Q₁ MR₁ = 200 - 4Q_1. A second hospital enters the market, and the competition changes the demand curve facing Hospital 1 to:

P'1 = 100 - Q'1 MR'1 = 100 - 2Q'1

where Q is quantity demanded of hospital services, P is price, and MR is marginal revenue. Assume marginal cost is constant at $20. The competition __________ the quantity produced and __________ the price charged by Hospital 1.

A. reduces; reduces

B. increases; increases

C. increases; decreases

D. decreases; increases

7. Member disenrollment may cause MCOs to:

A. reduce the quality of care by not offering the latest high-tech treatments.

B. increase the quality of care due to the positive externalities.

C. increase price discrimination.

D. decrease price discrimination.

8. Evidence suggests that nonprofit hospitals in the United States are __________ than for-profit hospitals.

A. less efficient

B. more efficient

C. more efficient and higher quality

D. not very different in efficiency

9. Workers in the South Pacific negotiate an increase in health insurance benefits worth $0.25/hour. The additional cost to employers is $0.25/hour. What happens to the market wage rate and employment level in the South Pacific?

A. The wage rate remains unchanged and the employment level increases.

B. The wage rate falls by $0.25/hour and employment remains unchanged.

C. Both the wage rate and the employment level fall.

D. The wage rate increases and the employment level falls.

10. Polsky and Nicholson decompose the differences between HMOs and non-HMOs into differences in risk selection, utilization, and price. They find that the HMOs have __________ largely due to __________.

A. lower expenditures; lower prices paid for services.

B. lower expenditures; lower utilization.

C. higher expenditures; more favorable risk selection.

D. higher expenditures; higher utilization.

11. Hansmann and colleagues found the for-profits to be quicker in adjusting to market demand changes. This may be related to:

A. different decision-making processes in the for-profit firms.

B. for-profits' better access to the capital markets.

C. for-profits' emphasis on patient amenities.

D. nonprofits' emphasis on quality of care.

12. Small businesses may not offer health insurance because of:

A. high price.

B. high price and redlining.

C. high price, redlining, and employee preference.

D. high price, redlining, state mandates, and employee preference.

13. Analysts have suggested that the nursing home sector has large numbers of non-profit providers because:

A. older people cannot afford for-profit care.

B. religious institutions often provide the care.

C. it is difficult to monitor nursing home quality, and nonprofit institutions would have less incentive to skimp on care.

D. government provides incentives to nonprofit providers.