The study of economics attempts to explain and predict human behavior. "The fact that neurosurgeons have to raise their fees to offset rising malpractice premiums is not necessarily a bad thing. By paying those higher fees, patients are essentially purchasing insurance." Comment on this statement. What does it mean? Do you agree that this "is not necessarily a bad thing?" (10 pts)

2. Many consider supply and demand the two most useful concepts in economics, aNew England Journal of Medicinepublication shows that higher nurse staff levels are associated with a variety of improved health outcomes. Use this information to make a business case for hiring more nurses. (10 pts)

3. John and Jane both use the statin drug Crestor, which is marketed by AstraZeneca (AZ). Both obtain the drug from the same Walgreens pharmacy. John is enrolled in a small HMO; Jane has no insurance and pays for AZ on her own. (15 pts)

Pricing of drugs like Crestor is complicated by a system of warehousing and rebates, but at the end of the day, AZ makes less money from John's prescription than from Jane's prescription. Why is it that a small HMO can secure for John a better deal on Crestor than Walgreens is able to secure for Jane?

4. Offer two distinct reasons why hospital acquisition of physician practices was a flawed economical strategy. (One sentence per reason is sufficient.) (5 pts)