question 1

When abdominoplasty costs were $6,000, Dr. Hurwitz treated 300 patients. When they dropped the price to $5,000, customers increased to 500. What is the elasticity of demand for abdominoplasty using arc elasticity or the midpoints formula (rounded-off to 2 decimal places)?

	a.	- 0.21
	b.	- 2.75
	c.	- 1.57
	d.	- 0.28
	e.	none of the above

Question 2

In terms of raising revenue did the doctor make the right decision (in question 1)

	a.	Yes
	b.	No
	c.	cannot tell
	d.	revenue remained the same

Question 3

Dr. JD, an oncologist, read a study that concluded that whites are more prone to melanoma than blacks. Despite reading this, Dr. JD ignores the finding and continues to pay more attention to blacks, spending more hours with them for possible melanoma findings. He has no basis for doing it this way he just likes to do it this way. This doctor is engaged in:

	a.	taste discrimination
	b.	efficient statistical discrimination
	c.	inefficient statistical discrimination
	d.	all of the above
	e.	none of the above

Question 4

	Subject: Health as investment

Everything else equal, if health depreciation rate increases, the EQUILIBRIUM Health level

	a.	will increase
	b.	will decrease
	c.	will stay the same
	d.	none of the above

Question 5

	Use the midpoints formula to compute the elasticity given the following price, quantity combinations: If Price of surgery = $12,000, 11 patients will be willing to undergo it If Price of surgery = $19,000, 4 patients will be willing to undergo it

round off your answer.

	a.	- 1.00
	b.	- 1.38
	c.	- 13.8
	d.	- 2.07
	e.	none of the above

Question 6

What is the HHS Index for City A which has the following hospitals:

Hospital 1 owns 35% of the market

Hospital 2 owns 30 % of the market

Hospital 3 owns 20 % of the market

Hospital 4 owns 5% of the market

Hospital 5 owns a certain % of the market

What is the HH Index here?

	a.	0.295
	b.	0.265
	c.	0.214
	d.	0.54
	e.	not enough information

Question 7

"monopoly rents" acquired by doctors refer to

	a.	compensation they get because of the most intelligent, most talented, most skilled and most indispensable profession in any society
	b.	compensation they get because of the cuthroat competitive nature of the physician labor market given that there are too many doctors who can practice
	c.	compensation they get because they are so few of them given the strict regulation and requirements needed before one can become a practicing physician making it very difficult for many individuals to become a doctor and not so much directly due on their superior skills.
	d.	payments they have to make as they are forced to rent expensive townhouses in urban areas where they will practice

Question 8

A medical arms race

	a.	is a situation where hospitals compete with each other
	b.	leads to lower prices of services
	c.	does not affect the prices of services
	d.	a and c
	e.	a and b

Question 9

A patient goes under the knife and will either die right after surgery, survive for 1 year, or survive for 2 more years. Assume that the probability of surviving for a year is 60% and surviving for 2 years in 30%,

what is the EXPECTED number of years that this person is expected to live after surgery?

	a.	11 years
	b.	1.2 years
	c.	0.6 of a year
	d.	half a year
	e.	none of the above

Question 10

As a person gets older the change in equilibrium health (H*) is consistent with

	a.	The MEC curve shifts to the right
	b.	a movement down the MEC curve
	c.	a movement up the MEC curve
	d.	the marginal cost line shifting down
	e.	a and c