1. 1. Briefly explain the Friedman/Kuznets hypothesis about the American Medical Association.

2. 2. Using the idea of the "compensating differential," explain how we can observe two different wages for highly educated individuals in different professions in equilibrium. Use a simple graph and explain yourself.

3. 3. Suppose that an accountant earns less than a radiologist. Explain how the internal rate of return to "investing" in the accounting profession can still be higher than investing in being a radiologist.

4. 4. The market for physician services has two distinct features. First, physicians have pricing power. Second, there is entry and exit. What is the name of the model that captures these two phenomena? Graph what the equilibrium looks like.

5. 5. Explain how the effects of physician induced demand on utilization differ depending on whether or not insurance reimburses based on a fee-for-service or a capitation design.