Full Test Bank The Physicians’ Services Market Chapter.9

Chapter 9: The Physicians’ Services Market

Multiple Choice

Suppose the market for nursing services in a local community is so dominated by a singly community hospital that for all practical purposes it is considered a monopsony. Using the diagram below, answer questions 1-2.

Wages

MRC

S

W₂

W₁

W₀

MRP

0

E₃

E₂

E₁

E₀

E = Number of Nurses Employed

1. What is the equilibrium wage and level of employment under monopsony?

1. W₁ and E₁.
2. W₂ and E₀.
3. W₀ and E₀.
4. W₀ and E₁.
5. W₀ and E₂.

2. If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be?

1. W₁ and E₁.
2. W₂ and E₀.
3. W₀ and E₀.
4. W₀ and E₁.
5. W₀ and E₂.

3. What is the most significant cost of attending medical school?

1. Tuition and fees.
2. Books and incidentals.
3. The income foregone.
4. Room and board.
5. Pain and suffering.

4. Which of the following would increase the supply of physicians?

1. Increasing the cost of attending medical school.
2. More scholarships and grants to cover medical school tuition.
3. Increasing the medical school entrance requirements to include 15 hours of economics.
4. Making it easier for plaintiffs to prove medical malpractice claims.
5. Paying medical schools to eliminate residency opportunities in some specialties.

5. Which of the following statements about the distribution of physicians among specialties is true in the United States?

1. The majority of physicians specialize in general/family practice.
2. There are twice as many generalists as there are specialists.
3. There are twice as many specialists as there are generalists.
4. The specialty distribution in the U.S. is similar to that of the rest of the world.
5. None of the above.

6. According to surveys by the Medical Group Management Association, the average primary care physician earned approximately _______ in 2010.

1. $125,000.
2. $150,000.
3. $185,000
4. $200,000.
5. $225,000.

7. Surgical specialists earn more than general/family practice physicians. Which of the following statements is not true regarding this income differential?

1. Surgeons earn more because their practice costs, including medical malpractice insurance is higher.
2. Surgeons earn more to compensate them for the extra years spent as residents.
3. Physicians’ incomes are determined to a large extent by supply and demand conditions with respect to each specialty.
4. Surgeons will always earn more than general practitioners because they are smarter than general practitioners.
5. Surgeons earn more than general practitioners because cutting into people is messy.

8. The rate of return on an investment in medical education

1. is inversely related to the length of time spent in formal schooling.
2. is inversely related to income.
3. will increase with an increase in the availability of student loans.
4. is much higher than the rate of return on an undergraduate business degree.
5. is inversely related to the number of years in the profession.

9. Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients. This practice of self-referral is an example of

1. moral hazard.
2. adverse selection.
3. res ipsa loquitor.
4. physician-induced demand.
5. cognitive dissonance.

10. The observed variations in practice patterns in different regions of the country are difficult to eliminate

1. because of the many alternative treatment options available for most ailments.
2. due to the localized nature of most medical practice.
3. because it is difficult to change the preferences of physicians and patients.
4. the observed variations are so minor that they are of little concern to policy makers.
5. responses a, b, and c are all true.

11. To address the shortage of physicians on the horizon, it will be necessary to

1. build more medical schools.
2. provide more grants and scholarships for medical education.
3. allow the admission of more foreign-educated physicians.
4. all of these are true.

12. In 2010, the medical specialty that earned the highest rate of return on investment was

1. general primary care.
2. Internal medicine.
3. pediatrics
4. orthopedic surgery
5. none of these

13. Suppose the number of medical school graduates continues to increase over the next decade. Which of the following is true?

1. Physicians’ salaries must fall.
2. Physicians’ salaries must rise.
3. Physicians’ salaries will fall only if the demand for medical services falls.
4. Physicians’ salaries will fall if the demand for medical services rises more than the supply of physicians rises.
5. Physicians’ salaries will rise if the demand for medical services rises more than the supply of physicians rises.

14. Physicians salaries increased substantially over the decade 1995-2005 from an average of $215,000 to $315,000. What is the best explanation for this?

1. Physicians were smarter in 2005 than in 1995.
2. The supply of physicians has increased.
3. The supply of physicians has decreased.
4. The demand for physicians has increased.
5. The demand for physicians has decreased.

15. Starting salaries for female OB/GYNs are higher than those of male OB/GYNs. What is the best explanation for this?

1. Female OB/GYNs have more human capital than male OB/GYNs.
2. Female OB/GYNs are smarter than male OB/GYNs.
3. The demand for female OB/GYNs is greater than the demand for male OB/GYNs.
4. The demand for female OB/GYNs is less than the demand for male OB/GYNs.
5. More males are in OB/GYN residency programs than females.

16. Input demand is called derived demand because

1. demand for an input is derived from demand for the product or service it produces.
2. demand for an input is derived from its availability in the input market.
3. demand for the output produced is also derived from consumer demand.
4. input demand actually determines how much output is produced.

17. An important element in estimating the present value of an investment is the calculation of the discount factor. The discount factor may be expressed as _______ where r is the discount rate and n is the number of years the investment is held.

1. (1 + r)ⁿ
2. (1 + n)^r
3. 1/(1 + r)ⁿ
4. 1/(1 + n)^r

18. Empirical studies that suggest differences in utilization rates between fee-for-service and managed care plans

1. are unreliable due to statistical biases.
2. conclude that financial incentives are not the reason for differences in the amount of care physician provide.
3. show no differences in health status among patient groups.
4. are unable to differentiate between the impacts due to financial incentives and those due to clinical rules.