BUSI 629 Quiz 4,5,6

BUSI 629 QUIZ 4: Quiz: Pricing

1. An increase in insurance coverage would result in higher sales and higher prices.
2. Prices will rise if there is excess demand.
3. Cost cutting cannot increase profits.
4. Marginal revenue equals P + ε, where ε is the price elasticity of demand.
5. In exhibit A, what is the marginal cost of producing 2,000 visits?
6. Your marginal cost is $100, and your price elasticity of demand is –3.00. You charge $150, but increasing your price to $175 should increase profits.
7. Your average and marginal cost is $300. You charge $500 and serve 1,000 customers. You forecast sales of 1,200 at a price of $450. Which of the following statements is true?
8. Your marginal cost is $10, and you face an elasticity of –5.00. Which price should you choose to maximize profits?
9. Which of the following attributes of healthcare products makes price discrimination easy?
10. You serve 3,000 commercial patients and 1,000 HMO members. Your fixed costs are $50,000, and your incremental cost is $50. You currently charge private pay patients $75 and HMO members $60. If you could negotiate a higher price for HMO members,

BUSI 629 QUIZ 5: Economic Analysis of Clinical and Management Interventions

1. Healthcare managers seldom have to worry about asymmetric information.
2. A challenge for incentive-based payments is that
3. You are considering acquiring a firm rumored to have developed an effective gene therapy for diabetes. The firm’s value depends on this therapy. If the therapy is effective, it is worth $200 per share; otherwise it is worth no more than $40 per share. Your firm’s management and marketing strengths should increase the share price by at least 50 percent in either case. You must make an offer before the results of clinical trials are in. The owner will sell for the right price. Make an offer for the firm.
4. Average spending is $2,560. Those with a family history of cancer (4% of the population) spend $40,000 on average, and those with no family history (96% of the population) spend $1,000. Which of the following statements is true?
5. Fee-for-service compensation creates an incentive to avoid very sick patients.
6. Which of the following is an example of opportunism?
7. Insurance costs $2,560. Those with a family history of cancer (4% of the population) spend $40,000 on average, and those with no family history (96% of the population) spend $1,000. You are not risk averse, and you do not have a family history of cancer. What are you likely to do?
8. Fee-for-service and salary compensation create very similar incentives.
9. Asymmetric information is of special concern when
10. Case rate and capitation compensation create very similar incentives.

Quiz 6: Government Intervention

1. Firms with substantial market power are guaranteed to be profitable.
2. Most healthcare firms have some market power.
3. A system anticipates that spending $300,000 on an advertising campaign will increase bed days by 650. The marketing department anticipates that each additional bed day will yield $2,100 in additional revenue and will increase costs by $1,700. The campaign
4. Two orthopedics practices, one with a 12 percent market share and one with an 8 percent share, are considering a merger. Advantages of the merger would include which of the following?
5. If Buckley and Stetler merge, they will have a volume of 24,600, fixed costs of $140,000, marginal costs of $50, and a market share of 6 percent. The price elasticity of demand for clinic services is -0.22. Which of the following statements is true?
6. The social demand for flu vaccine equals 10,000 – 20 × (Price – $10) because of the external benefits of the vaccine. The supply of vaccine still equals 180 × Price. What is the social equilibrium price and quantity?
7. One reason why few physicians have joined health information exchanges is their limited value, because so few healthcare providers have joined exchanges. This is an example of
8. Government production of healthcare is rare in the United States.
9. Disease surveillance costs $85 per hour, and it is a public good. The wealthiest third of the population has a willingness to pay of $200 – Quantity. The middle third has a willingness to pay of $100 – Quantity. The poorest third has a willingness to pay of $100 – Quantity/2. Which of the following statements is true?
10. The private demand for flu vaccine equals 10,000 – 20 × Price. What will the quantity demanded be when the market price is $25?