Question

When the patient lacks information, the physician demand curve _____.

	a.	becomes unitary elastic
	b.	becomes less elastic
	c.	becomes perfectly elastic
	d.	becomes more elastic

Hospitals compete mainly in a _________ market.

	a.	Price market
	b.	Product market
	c.	Geographic market
	d.	Quality market

The cost of a national health insurance program would be____ and the availability of services _______ when supply is more ________.

	a.	Greater; diminished; elastic
	b.	Greater; diminished; inelastic
	c.	Less; diminished; inelastic
	d.	Less; enhanced; inelastic

Answer 1

1. Ans b) becomes less elastic

As the patients lack information , they do not know much about other physician and the prices charged by them, so they do not have option to switch to other physicians irrespective of the price charged by the physician, so the demand becomes less elastic.

Unitary, perfectly or more elastic is when they have several substituents available in the market.

2. Ans c) Geographic market

Price, Product and Quality of hospitals remain more or less the same. But the competition amongst the hospitals is mainly based on Geographic location. The patients choose the hospital based on location and accessibility.

3. Ans b) Greater; diminished; inelastic

In case of inelastic supply of health insurance program, the cost incurred would be high and the service level diminished. The case would not be the same in case of elastic supply of health insurance program.