Question 1 The Stern Report seeks to discount $6 trillion of annual benefits occ

Question

Question 1

The Stern Report seeks to discount $6 trillion of annual benefits occurring 100 years from now. If these are discounted at a rate of 4 percent, the present discounted value of the benefits will be approximately:

$828.2 billion.

$455.7 billion.

$118.8 billion.

$81.6 billion.

Question 2

In Nyman’s insurance formulation:

some portion of the income transfer is welfare increasing, but there can also be moral hazard which is welfare decreasing.

there is no income transfer.

none of the insurance transfer is welfare increasing.

all of the insurance transfer is welfare increasing.

Question 3

Compared to men, women have __________ health expenditures earlier in their lives and __________ health expenditures later in their lives.

lower; lower

higher; lower

lower; higher

higher; higher

Question 4

Women who have had Cesarean births may be denied coverage due to “pre-existing conditions.” Insurers who deny this coverage are trying to:

prevent the moral hazard from higher cost clients.

prevent adverse selection of higher cost clients.

satisfy the preferences of those consumers who buy their insurance.

increase profits by enlarging the pool of potential buyers.

Question 5

According to economic definitions, __________ has (have) most of the characteristics of public goods.

“over the air” radio

public schools

city-run golf courses

county-run hospitals

Question 6

In the first decade of the twenty-first century, the nursing home population has:

grown at about 4 percent per year.

doubled.

dropped slightly.

fallen in half.

Question 7

Equity refers to the __________ of the allocation of goods and services:

costs

fairness

efficiency

benefits

Question 8

Resource based relative value scales (RBRVS):

include no provider liability insurance component.

include constant provider liability insurance for all specialties.

vary the provider liability insurance depending on the particular service.

provide total protection against all malpractice claims.

Question 9

Suppose a worker earns $14 per hour plus health benefits worth $2 per hour. If the employer withdraws the benefits and offers the worker $17 per hour the worker will be:

better off because $17 is more than the $16 he or she was earning in wages plus benefits.

as well off because he or she is earning more than before.

worse off because previously he or she was not getting the benefits.

worse off because previously he or she was getting the benefits.

Question 10

If, as a result of a plague, the equilibrium wage level has risen, one can conclude that:

the plague has imposed no costs on society.

supply of labor has decreased more than demand for labor.

demand for labor has increased more than supply of labor.

supply of labor has increased more than the demand of labor.

$828.2 billion.

$455.7 billion.

$118.8 billion.

$81.6 billion.

Explanation / Answer

Question 1

Find the present value such that PV = 6000billion/(1 + 4%)^100 = 118.8 billion

Question 2

Private health insurance according to him usually behave as an income transfer between sick and the healthy. If we have more moral hazard in the insurance market, there would be more money available for income transfer which means moral hazard makes health care more affordable. In his views moral hazard is sometimes welfare increasing

Correct choice is some portion of the income transfer is welfare increasing, but there can also be moral hazard which is welfare decreasing.

Question 3

Women live longer than man perhaps this is the reason why they have lower health expenditure earlier in their lives and they remain fit. Correct choice is lower; higher

Question 4

Correct choice is prevent adverse selection of higher cost clients. Note that when they are denied, women with C-section would self select themselves and will not take the insurance.

Question 5

Correct option is “over the air” radio. Other examples have excludability because hospitals can deny patients, schools can deny students when they are equipped.

Question 7

Equity implies fairness of equitable distribution of goods and services

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