The two major problems that have plagued the U.S. healthcare system over the pas

Question

The two major problems that have plagued the U.S. healthcare system over the past few decades are:

Rising costs and a surplus of nurses

Declining costs and a shortage of doctors

Declining costs and overinsured individuals

Rising costs and millions of uninsured individuals

The adverse selection problem that arises in the private health insurance market implies that:

healthy people will often exit the market and take their chances, leaving only the likely-to-be-sick population for insurers

sick people will often exit the market and take their chances, leaving only the likely-to-be-healthy population for insurers

insurers in the private market have no control over healthcare prices and this creates adversity for the government

d. private health insurance is impossible

Assume we have a price of P in a competitive market. If quantity demanded exceeds quantity supplied at P, it must be the case that:

there is a surplus in the market and price will decline.

there is a surplus in the market and price will increase.

there is a shortage in the market and price will decline.

there is a shortage in the market and price will increase.

Heilbroner states that all human societies have relied upon one of three solutions to solve the basic economic tasks/problems. These solutions are:

tradition, command, and interest rates

command, markets, and tradition

command, wages, and feudalism

production, distribution, and wages

Assume we have a competitive market with an equilibrium price of P* and equilibrium quantity of Q*. Now, suppose the government imposes a price ceiling in this market. This price ceiling will be set ________ P* and will create a __________ in the market. Choose the correct combination.

above; shortage

above; surplus

below; shortage

below; surplus

Rising costs and a surplus of nurses

Declining costs and a shortage of doctors

Declining costs and overinsured individuals

Rising costs and millions of uninsured individuals

Explanation / Answer

1) D

Millions of people were uninsured and costs of healthcare have risen in the past, It is so huge that healthcare today occupies considerable portion of our GDP

2) A

Adverse selection can result in healthy people paying much higher premium, So they would rather just exit the market.

3) D

Quantity demanded exceeds quantity supplied then the immediate result would be rise in prices.

4) B

Tradition, Command and market this therory was stated by Heilbroner

5) C

Ironically most governments have no choice but to set the price ceiling little below the current market price and it will almost always create shortage of goods

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