NAME:___SAMPLE FIRST TEST ANSWERS–
NOTE YOURS WILL NOT COVER CH. 5 AND WILL BE 1.5 HOURS
Health Economics First Test, Georgia State University, Rashad
Thursday, February 7
, 2008, 4:30 – 6:30pm
Please put all answers on the question sheet.
You have two hours to finish the test.
You may use your textbook, notes,
and handouts in answering.
Please use full sentences when answering.
Best of luck.
(5 points) According to the
Mosby Medical Encyclopedia
, what is the definition of health?
List four inputs in the health
Health is “a state of physical, mental, and social well-being and the absence of disease or other abnormal condition.”
Inputs in the health production function include medical care, technology, profile, lifestyle, socioeconomic status, and the
(5 points) How is medical care different from other goods?
In answering, list the four
s that your book discusses, carefully
Medical care is very different from other commodities, as it is made up of a myriad of heterogeneous goods and services.
because it is incapable of being assessed by the five senses.
because both production by
physicians and consumption by patients take place simultaneously.
Because they occur simultaneously, medical care cannot
be stockpiled, and so maintaining an
of medical care is not possible.
Also, the composition and intensity of
medical care can differ greatly depending on the provider, the consumer, and the point in time, and so medical care services
(8 points) What does “flat-of-the-curve” medicine refer to? Explain using a specific everyday example.
For which age
groups might medical care have the most effect?
“Flat-of-the-curve” medicine refers to the small marginal impact of medical care services on the health status of individuals.
It refers to the flatter portion of the slope of the total product curve when looking at the effect of medical care on health
An example would be if a person did little in terms of lifestyle changes to prevent the onset of an illness and then
consumed medical care in order to improve his health.
If health does not improve much, then the individual is probably
consuming medical care at a point where the impact on health is negligible.
Groups for which medical care may be most
likely to have an effect include vulnerable populations such as infants and the elderly (see p.41 of textbook).
(2 points) What are “malignant neoplasms,” said to be the second leading cause of death in the United States?
Malignant neoplasms are cancers.
(5 points) What is the significance of the law of large numbers when third-party payers are involved?
The law of large numbers implies that whereas single events may be random and largely unpredictable, the average outcome