Question

For any good or service including health care, rationing is necessary when:                       

[A]      The good or service is something people are forced to consume even if they do not really want it. E.g. dental care.

[B]       Prices are set by law or custom

[C]      The quantity needed exceeds the quantity available at the prevailing price, and prices are not allowed to adjust.

[D]      The market clearing price and quantity under free markets is different than the equilibrium condition set by law.

What is the predominant structural change in health care markets since 1965?                   

[A]      The amount of drugs used to treat illness has rapidly increased

[B]       The share of health expenditures paid directly by the patient has dramatically declined

[C]      The number of hospital beds has grown exponentially

[D]      The cost of medical education has risen faster than inflation or economic growth

Answer 1

1. Option C

Explanation: When the quantity needed is greater than quantity supplied and the market price does not adjust, rationing helps in distribution of the good.

2. Option B

Explanation: Out of pocket expenses have declined.