The observed variations in practice patterns in different regions of the country are difficult to eliminate
a. because of the many alternative treatment options available for most ailments.
b. due to the localized nature of most medical practice.
c. because it is difficult to change the preferences of physicians and patients.
d. the observed variations are so minor that they are of little concern to policy makers.
e. responses a, b, and c are all true.
QUESTION 2With only two goods, if the income effect is in the same direction as the substitution effect then the good is
a. normal
b. inferior but not Giffen
c. Giffen
d. There is not enough information to answer.
QUESTION 3A reason there are divisional conflicts over the transfer price
a. the manager of the upstream division gets rewarded for a transfer price that is too high
b. the manager of the downstream division gets rewarded for a transfer price that is too low
c. the corporate headquarters does not have enough information to determine the correct transfer price
d. all of the above
QUESTION 4Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients. This practice of self-referral is an example of
a. moral hazard.
b. adverse selection.
c. resipsaloquitor.
d. physician-induced demand.
e. cognitive dissonance.
QUESTION 5If a person's indifference curves can be represented as a straight line, the person views the goods as
a. perfect substitutes
b. perfect complements
c. complements (but not perfect)
d. substitutes (but not perfect)
QUESTION 6The efficient transfer price is
a. the upstream division's average cost
b. the upstream division's marginal cost
c. the downstream division's average cost
d. the downstream division's marginal cost
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