Chapter 6 Exam Prep The Demand for Health

Dewar ASQZ

Chapter 6

Multiple Choice

1. Which of the following can be regarded as a fundamental commodity from an economic and policy perspective and one of the true objects of people’s wants and for which other tangible goods and services are used to create it?

[1] Health

[2] Wealth

[3] Life

[4] Intelligence

<Answer: 1>

<Complexity: Moderate>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 41>

True/False

2. Because health is not tradeable or purchased directly, it is possible for it to be analyzed in the market framework.

<Answer: False>

<Complexity: Easy>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 41>

Multiple Response

3. Which of the following are important insights captured by Grossman’s model?

[1] Health care is but one input in generating improvements in health.

[2] Genetics and environmental factors are aspects of health that cannot be controlled.

[3] Individuals do not demand health care for its own sake.

[4] Health care is a service that is dramatically overused.

<Answer: 1, 3>

<Complexity: Difficult>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 42>

Multiple Choice

4. Which of the following may shift the MEC curve to the left because people will eat richer foods and decrease exercise?

[1] Age

[2] Education

[3] Wealth

[4] Environment

<Answer: 3>

<Complexity: Difficult>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 44>

Fill-in-the-Blank

5. A model of the demand for health, developed in the 1970s by Michael Grossman, treats investment in health as a form of investment in _________ ___________.

<Answer: human capital>

<Complexity: Moderate>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 42>

Multiple Response

6. Health is modeled as being produced by individuals using which of the following means?

[1] Genetics

[2] Research

[3] Environment

[4] Lifestyle choices

[5] Medical care

<Answer: 3, 4, 5>

<Complexity: Difficult>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 42>

Multiple Choice

7. Which of the following is a measure of how much extra output can be produced with an extra unit of capital input?

[1] Marginal efficiency of capital

[2] Diminishing marginal returns

[3] Indifference curve

[4] Diminishing marginal utility

<Answer: 1>

<Complexity: Moderate>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 42>

True/False

8. In the investment model of health, the demand for health is conditional on both the cost of health capital and the rate of depreciation of the health stock.

<Answer: True>

<Complexity: Easy>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 42>

True/False

9. An individual with a lower endowment of health will require fewer inputs to achieve the same health stock than will an individual with a higher endowment.

<Answer: False>

<Complexity: Easy>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 43>

Multiple Choice

10. In the investment model, which of the following shifts the MEC curve to the right by raising the productivity of the inputs into the production of health?

[1] Age

[2] Education

[3] Wealth

[4] Environment

<Answer: 2>

<Complexity: Moderate>

<A-head: Health as a Form of Human Capital>

<Subject: Chapter 6, Page 44>