Economics

Short Answer Questions
(1-2 paragraphs are sufficient for short answer responses unless otherwise stated)
1. 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, a New England Journal
of Medicine publication 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.
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? (15pts)
4.Offer two distinct reasons why hospital acquisition of physician practices was a flawed economical
strategy. (One sentence per reason is sufficient.) (5 pts)