Week 12 Third Test Answers

Week 12 Third Test Answers - NAME_ANSWER KEY Health...

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NAME:____ANSWER KEY______________________________________________________________________ Health Economics Third Test, Georgia State University, Rashad Thursday, April 2 nd , 2009, 4:30 – 6pm Please put all answers on the question sheet. You have one and a half hours to finish the test. You may use your textbook, notes, and handouts in answering starting 5:15pm. Please use full sentences when answering. Best of luck. 1. (6 points) You own a hospital and are wondering if you are minimizing the costs of your variable inputs, physician assistants and registered nurses. Currently, the marginal product of a registered nurse is 200 and the marginal product of a physician assistant is 800. You have to pay your registered nurses a wage of $30 and your physician assistants a wage of $40. Should you employ more registered nurses, more physician assistants, or are you at your cost-minimizing point? Justify your answer. Using the cost-minimizing rule ( RN RN PA PA w MP w MP = ) , we have 67 . 6 20 20 200 40 800 > > . We should therefore employ more physician assistants (PAs). 2. (6 points) List two arguments for why there may be rationale for government intervention in the context of medical services. (Various answers) - “An ounce of prevention is worth a pound of cure”: Costs of emergency room visits, when an illness has gotten worse and is more expensive to treat, may outweigh costs of covering medical costs for preventive measures. - There may be market failure in terms of imperfect information and the four “I”s discussed in Chapter 2. - There may be market failure in terms of negative externalities associated with being in poor health. (For example, having the flu makes it more likely for others to catch the flu. Being in poor health may also affect productivity.) - There may be equity reasons for providing health care publicly, as those who are poorer have less access to it. 3. (4 points) Which of the following statements is NOT TRUE? a. In the special interest group theory, incumbent politicians attempt to increase their probability of being reelected by supplying legislation that promises to redistribute wealth away from the general public and toward various special interest groups. b. Government failure and market failure can coexist. c. The public interest theory model of government behavior implies that the typical individual consumer is "nickeled and dimed" by wealth-transferring legislation. d.
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Week 12 Third Test Answers - NAME_ANSWER KEY Health...

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