Healthcare Supply Verified Test Bank Chapter.10

Dewar ASQZ

Chapter 10

Fill-in-the-Blank

1. The __________________ of the market is heavily dependent on theories of how firms behave, and the topic is often called the theory of the firm.

<Answer: supply side>

<Complexity: Moderate>

<A-head: Introduction>

<Subject: Chapter 10, Page 79>

True/False

2. Most hospitals and nursing homes, and some insurance companies, do not aim to maximize profit but aim instead to maximize other more altruistic goals such as the number of covered lives.

<Answer: True>

<Complexity: Easy>

<A-head: The Nature of Supply>

<Subject: Chapter 10, Page 79>

Multiple Choice

3. Which of the following factors underlying the supply curve increases the quantity supplied at every price, causing a rightward shift in the supply curve?

[1] Technological change

[2] Input price

[3] Size of the industry

[4] Weather

<Answer: 4>

<Complexity: Moderate>

<A-head: The Nature of Supply>

<Subject: Chapter 10, Page 80>

Multiple Choice

4. Which of the following in the market is now modeled in static and dynamic frameworks, and estimates are made for the responsiveness of price changes in the markets as they are influenced by the quality and breadth of the provider network?

[1] Production

[2] Competition

[3] Technology

[4] Advancement

<Answer: 2>

<Complexity: Moderate>

<A-head: Empirical Estimates of Supply>

<Subject: Chapter 10, Page 80>

Matching

5. Match the factor underlying the supply curve with the appropriate description.

[1] As the product becomes cheaper to produce, suppliers are willing to offer more for sale at a given market price.

<Answer: Technological change>

[2] If physicians’ wages were to rise, this increase in labor cost would result in suppliers’ decreased willingness to offer as much for sale at the original price.

<Answer: Input prices>

[3] Because physicians can use radiology for diagnosis as well as treatment, this will cause the quantity supplied to decrease at every market price, thus shifting the supply curve to the left.

<Answer: Prices of production-related goals>

[4] As more firms enter the market, the aggregate supply of the product will be greater at every price, thus causing supply to shift to the right.

<Answer: Size of the market>

<Complexity: Difficult>

<A-head: The Nature of Supply>

<Subject: Chapter 10, Page 80>

Fill-in-the-Blank

6. Analysis of supply in economics is often dominated in neoclassical frameworks by theories of the firm that are based on an assumption that the firm’s main goal is to maximize ________________.

<Answer: profits>

<Complexity: Moderate>

<A-head: The Nature of Supply>

<Subject: Chapter 10, Page 79>

True/False

7. An important aspect of healthcare provision is that, typically, firms do not aim to maximize profits nor do they aim to earn any profits at all.

<Answer: True>

<Complexity: Easy>

<A-head: The Nature of Supply>

<Subject: Chapter 10, Page 79>

Fill-in-the-Blank

8. Theories based on profit maximization have another use in that they provide a helpful set of performance____________________ against which firms’ actual performance can be compared.

<Answer: benchmarks>

<Complexity: Moderate>

<A-head: The Nature of Supply>

<Subject: Chapter 10>, Page 79>

True/False

9. In the healthcare economy, as in many other markets, if the firm has a high capital-to-labor ratio, it is more responsive to changes in price due to the inability to easily switch production capacity because of the fixed nature of capital or the substitutability of labor for capital.

<Answer: False>

<Complexity: Moderate>

<A-head: Elasticity of Supply>

<Subject: Chapter 10, Page 80>

Fill-in-the-Blank

10. In any market, including the market for healthcare services, there is a __________ relationship between price and quantity supplied.

<Answer: direct>

<Complexity: Moderate>

<A-head: Summary>

<Subject: Chapter 10, Page 80>