Midterm Flashcards
(135 cards)
1
Q
Market Efficiency
A
( i.e., eliminating anticompetitive elements from an industry)
2
Q
Rational Behavior
A
Consumers and producers are assumed to weigh the costs and benefits of different courses of action and to choose the most preferred alternative.
3
Q
Two tools of economists
A
Scarcity (Marginal Analysis) and Choice (Supply and Demand Analysis)
4
Q
Diminishing Marginal Benefits/Utility
A
these additional (marginal) benefits decline as more units are purchased
5
Q
Opportunity Cost
A
When a consumer makes a particular choice, the value they would have received from the next best choice is the opportunity cost of the choice they made
6
Q
explicit cost
A
i.e. out-of-pocket cost)
7
Q
implicit cost
A
i.e., use of one’s time)
8
Q
Technical efficiency means:
A
that the combination of inputs used will produce the maximum quality of medical services
9
Q
Economical efficiency:
A
occurs when the decision-makers selects the least costly combination of inputs, each of which is technically efficient.
10
Q
Factors Affecting Demand
A
Price Price of Substitute Products Price of Complementary Products Income Tastes and Preferences Population
11
Q
Consumer surplus
A
the difference between what a consumer would be willing to pay and what she actually has to pay (i.e., the market price).
12
Q
Complements
A
are goods or services that are used together.
13
Q
Demand curve will shift
A
either right or to left, An aging population will cause the demand for medical care to shift to the right
14
Q
The greater the number of people in a community the greater the demand for medical care
A
the demand curve shifts to the right
15
Q
Factors Affecting Supply
A
Price
Input Prices
Technology
Number of Suppliers
16
Q
A shift in Supply
A
When Wage increase (input price) shift upward (left)
When Technology increase marginal productivity (MP) , shift to down (right)
Similar to population on demand side, # of suppliers will cause a shift to the right (down)
17
Q
Market Equilibrium
A
At the prevailing price, the quantity demanded equals the quantity supplied
18
Q
Cross Price Elasticity
A
used to indicate the closeness of substitutes and the effect on complementary services of a change in price
19
Q
Supply Elasticity
A
responsiveness of supply to changes in price.
20
Q
Monopoly Model
A
When a perfect substitute does not exist for a firm’s product or service, then the firm has a downward sloping demand curve; it has some monopoly power
21
Q
Externalities
A
occur when an action undertaken by an individual (or firm) has secondary effects on others that may be favorable or unfavorable
22
Q
Major Demand side In-Kind Subsidies:
A
Medicare, Medicaid, CHIP, tax exemption of health insurance, and tax deductibility of medical expenses in excess of 7.5 % of adjusted gross income
23
Q
Supply side direct subsidies
A
health manpower education, graduate medical education, hospital construction, provision of medical services through VA, state and local government hospitals
24
Q
Supply side indirect subsidies
A
Granting tax-exempt status to non-profit hospitals, state’s assistance in financing hospital bonds
25
Two basic objectives of government:
1-improve market efficiency
| 2- redistribute income in a more equitable manner
26
Demand curves are downward sloping because of
Demand curves are downward sloping due to diminishing marginal benefits. Each additional unit of the good provides you with less utility than the previous unit
27
Which of the following will not increase the demand for medical services?
New cost-saving technology in MRI machines because technology improvements affect supply and not demand
28
Suppose the federal government will no longer provide financial support to hospitals (causing some public hospitals to close), but will instead give that money directly to taxpayers in the form of a tax credit on medical expenditures. What will happen to the equilibrium price and the quantity of physician office visits?
In this instance, the removal of government assistance to hospitals will shift the supply curve to the left, but the increase in income via the tax credit will increase the demand curve. This will cause price to increase, but the change in quantity is uncertain. A large increase in demand relative to the change in supply will cause quantity to increase. If supply shifts by a greater amount than demand, then quantity will decrease.
29
Suppose the government institutes new regulations on physicians requiring physicians to take additional years of training before practicing medicine. What will happen to the wages and quantity of physicians?
The additional regulation causes a barrier to entry. This will increase wages for current and future physicians, but will decrease the supply of physicians
30
There are two types of stents, coil and mesh, used when performing coronary angioplasty. These two stents are substitutes. If the price of coil stents increases, then
If the price of a substitute increases, then the demand curve for the product shifts to the right.
31
In a competitive market, firms will continue to produce until marginal cost is equal to
The profit-maximizing production level occurs when marginal revenue equals marginal cost, but when markets are perfectly competitive, marginal revenue is equal to price. Therefore, the
32
Supply curves are upward sloping because of
The reason the firm’s supply curve is upward sloping is because of the Law of Diminishing Returns. Each additional input yields less product than the previous input. Therefore, it costs more to produce the next unit
33
A “natural monopoly” is the result of
When a firm has decreasing average cost, it can decrease its price by simply expanding production and keeping other firms out of the market.
34
The private market cannot eliminate externalities when
One method to internalize an externality is to simply charge (compensate) anyone who benefits (is harmed) by the externality. When these individuals are easy to monitor and are to easy to collect or distribute funds to, these individuals’ transaction costs are low, and the externality can be internalized. On the other hand, when collection or monitoring is costly, then it is better for society to allow the externality to exist
35
Externalities occurred due to
Externalities occur due to a lack of property rights. As stated on page 11 of Chapters 17, when such external costs and benefits are not incorporated into the private decision-making process, the resultant output level is not optimal.
36
Which of the following is an example of an externality in the cigarette market?
In the case of firsthand smoke, the original smoker is part of the market. When they make the conscious choice to smoke, they are internalizing both the private benefit and the private harm it imposes on them. On the other hand, secondhand smoke causes harm to individuals who are not part of the market for cigarettes. The other options cause changes within the market, but not externally.
37
The arguments against price competition in the medical care market is
As stated in the text, opponents of competition believe that when suppliers compete, patients are likely to be harmed; their preference is to substitute regulation and monopolization for competition.
38
Which of the following is not an example of a demand subsidy?
The Veterans Administration (VA) medical system is an example of a direct supply subsidy where the federal government supplies funds to hospitals, nursing homes, and physicians for the sole purpose to serving military veterans
39
Fill in the blank: A __________ is a tax where the tax rate _______ with wealth
A regressive tax, by definition, is a tax where the tax rate decreases with wealth.
40
Which of the following statements is true about the public interest theory?
The public interest theory seeks to redistribute funds to the poor. Such redistribution, if financed by a tax, will introduce distortions into the market, which will lead to less efficiency.
41
If nurses can perform the same activities as a physician assistant, then these two professions
When one input can replace another input in production, it is a substitute
42
Which of the following statements is true about the economic theory of regulation
The economic theory of regulation states that politicians move funds toward politically powerful groups, which will allow the politician to remain in power or seek election into a political office.
43
Fill in the blanks. ____________ seeks to redistribute funds to ____________ and ____________ seeks to __________ market efficiency.
The economic theory of regulation seeks to gain more votes by supporting strong political groups. The public interest theory seeks to internalize externalities and minimize or prevent the formation of monopolies.
44
A process that determines how many dollars will be returned for dollars invested in a health promotion program is called
A cost-benefit analysis is defined as the DBenefits/ DCost. If we consider cost as the amount invested and benefits are the returns.
45
Suppose a hospital is currently producing 100 inpatient days per day with 20 physicians and 50 nurses. The hospital receives a grant to provide low-cost care. The grant includes funds to double the size of the nursing staff. After the grant, the hospital produces 150 inpatient days per day. What is the marginal product of nurses?
The change in production is equal to 150 - 100 = 50 additional inpatient days. The size of the nursing staff doubled, indicating 50 additional nurses were added to the staff. Therefore, the marginal product of nurses resulting from the change is 50/50 = 1.
46
The QALYs (quality adjusted life years) measure of health captures the idea that people may be willing to accept
A QALY captures both the length of life remaining as well as the quality of life remaining. Individuals may have a trade-off between these two items.
47
To allocate resources efficiently, one should consider
Efficiency is gained by adding resources to the program with the largest marginal product. The payoff of adding an additional input in a program is measured by the programs’ marginal product. The program with the largest marginal product has the largest payoff.
48
The number one cause of death in 2007 is
The number one cause of death in 2007 is heart disease
49
Which of the following is the primary reason for the reduction in neonatal mortality between 1970 and 1988?
As stated in the text, the primary reason for the decrease in infant mortality is that the number of high-risk pregnancies was reduced by the legalization of abortion
50
If wages for licensed practical nurses (LPNs) increase
If the price of the substitute rises, then the demand for the good will increase as consumers will move away from the more expensive substitute.
51
Suppose the state legislature passes a state mandate on mammography exams. Which of the following will occur?
The demand for mammography exams will increase, forcing the market price upwards. The increase in demand will increase the demand for registered radiologic technologists who perform this service.
52
A subsidy for home care services will
A subsidy for home care services will increase the demand for home care and thus for home care nurses. It will not affect the supply curve for home care. Rather it will change the quantity supplied.
53
An increase in the demand for medical schools will
An increase in the demand for medical schools will increase tuition at these institutions, but it will also increase the supply of new physicians. Physicians will become less scarce leading to lower wages. As the price of this input falls, the supply curve for services rendered by physicians shifts to the right, leading to an expansion in services and a decrease in price.
54
Consider an increase in the demand for dentures. As the supply curve becomes _____ elastic, the change in quantity supplied becomes_______.
More; larger
55
If the supply function in the medical sector is relatively inelastic, then a rightward shift in demand will cause
A rightward shift of the demand curves will cause both price and quantity to increase. The relative inelastic supply curve will cause price to increase faster than quantity.
56
As the average age in the population increases, the demand for hospitals will __________ and the demand for nursing homes will ___________ .
As the elderly population expands, there will be higher demand for both nursing homes and hospital care. Answer is (a)
57
The Balance Budget Act of 1997 for Medicare and Medicaid reduced the amount of funds residency programs could receive for instructing physicians in training. This has led to
As fewer students enter the profession, physicians will become more scarce, leading to higher wages. As the price of input rises, so too must the price of the output.
58
A decrease in the demand for physical therapy will lead to
A decrease in the demand for treatment will decrease the demand for the input, which will in turn decrease wages for that input causing a decrease in the number of students pursuing that career.
59
The Balance Budget Act of 1997 for Medicare and Medicaid decreased the reimbursement rate for hospitals by the number of beds they had available. Hospitals responded by
Hospitals reacted by closing beds, which in turn reduced their demand for inputs.
60
If nurses and physicians are complements in the hospital production function, then an increase in the tuition to nursing school will
The increased tuition will lead to fewer nurses. Because physicians and nurses are complements, fewer nurses will decrease the demand for physicians.
61
If nurses and physicians are substitutes in the hospital production function, then an increase in the tuition to nursing school will
The increased tuition will lead to fewer nurses. Because physicians and nurses are substitutes, fewer nurses will increase the demand for physicians.
62
Monopsony power by health insurance plans can lead to
Monopsony power indicates there is one buyer of inputs. This buyer can push equilibrium wages below perfectly competitive levels leading to less access to care and a lower level of quality.
63
A strong individual mandate with large fines is __________ by insurers because it will _______ adverse selection
A strong individual mandate, which forces individuals to buy insurance, will reduce the risk pool and decrease adverse selection.
64
Premiums based on experience ratings
Insurers make adjustments to your premium based on past health episodes.
65
The Health Insurance Portability and Accountability Act allows all the following except
HIPAA increased the tax deductibility of health insurance premiums for the self-employed to 80%.
66
Firms self-insure to
The state mandate forces large companies to offer employers health insurance. In return, these large firms can use their relative size to spread the health risk among all its employees and offer a lower premium than one that could be found on the open market individually.
67
Which of the following gave Blue Cross cost advantages compared to commercial health insurers?
Blue Cross was found to have increasing administrative cost as the number of enrollees expanded, but they did enjoy state (and federal up until 1986) tax exemption
68
Commercial insurers who use a(n) _____________ rating can steal ________ risk individuals from Blue Cross and Blue Shield and reduce cost.
As stated in the text, “a community rate is a tax on the insurance premium of a low-risk person.” Therefore, low-risk agents would prefer experience ratings to receive lower premiums.
69
Since 1975, which type of health insurance had the greatest increase in expenditures?
All three types of insurance experienced large growth between 1975 to 2008, but private insurance grew the most from $77 billion in 1975 to $1.232 trillion in 2008
70
Which of the following reduce price competition?
All of the above reduce price competition. Hospital consolidation leads to fewer competitors. Price regulation does not allow providers to compete in prices, only in quality. State regulation reduces the ability of providers to change prices
71
The failure of capitation payments is due to
Provider capitation mainly failed due to providers’ inability to manage risk, to receive risk-adjusted capitation payments from insurers, and because of conflict within medical groups regarding physicians’ payments
72
________ enrollees are the _______ price-sensitive, and they continue to purchase plans with the ______ premiums
FFS enrollees are the least price-sensitive, and they continue to purchase plans with premiums.
73
__________ place the incentive to reduce cost on the __________
A PPO places the incentive on consumers to reduce cost. If the patient uses PPO providers, their deductible is lower as well as their co-insurance rate, e.g., 10 percent (or $20) versus 30 percent for a non-PPO provider. The patient has the financial incentive to use fewer services from less costly providers.
74
Health insurance providers in order of increasing management are
Providers have no cost-containment HMOs their, not there providers capitation payments, which produces a strong incentive to reduce cost
75
Tax exemption of health insurance leads to _________ market distortion. _________ health insurance choices leads to _________ market distortion.
The tax exemption leads to more market distortion. More health insurance choices allow for more competition thus less market distortion.
76
Why didn’t HMOs grow in the 1960s and 1970s?
State and county medical boards would deny accreditation to hospitals that allowed physicians from HMO’s to practice within the hospital. Therefore, HMO companies lost access to hospitals.
77
Which of the following is not true about health insurance?
Health insurance causes people to be less sensitive about price changes. Therefore, demand becomes more inelastic.
78
Insurance plans that seek to reduce the moral hazard problem include
A low co-insurance rate plan forces patients to pay more out-of-pocket; therefore, patients are more price sensitive. An HMO uses capitation to incentivize cost reductions from the provider point of view.
79
Which of the following policies was not a cost-containment policy?
Although not all of these policies were effective methods to contain cost, they are all forms of cost-containment policies.
80
Which reimbursement mechanisms encourage over-servicing by doctors?
Fee For Service (FFS) encourages physicians to over service patients even to the point where the marginal benefit is less than the marginal cost of the treatment.
81
The increased supply of physicians was most aided by
The HPEA helped double the number of physicians from 141 physicians per 100,000 in the 1960s to 284 per 100,000 in 2000
82
A specific opportunity cost of attending medical school is:
All accounting costs of going to medical school
83
Physicians’ pay in the United States is high due to
Both high training costs and high return on training
84
Physician-induced demand
Physician-induced demand causes the demand curve to shift rightward, thereby increasing both price and quantity.
85
The observation that an increase in the supply of physicians to an area is matched by an increase in the price of physicians’ services (rather than a price decrease) can be explained via the supplier-induced demand hypothesis. Which of the following is also a plausible explanation for this observation
An increase in the supply of physicians reduces time and travel costs to consumers, causing demand to increase is a change in price not demand. In the response “An increase in the supply of physicians increases consumers’ perceptions of the quality of health care available, causing demand to increase”, not all increases in supply are associated with changes in quality.
86
Which of these would be likely to reduce the extent of supplier-induced demand?
If physicians are paid by the number of patients rather than the number of services, then there is no incentive to expand services.
87
For GPs (general practitioners) to play an effective coordinator’s role (rather than a gatekeeper’s) in a health care organization, they must be made financially responsible for their patients’ care. Thus, they should be paid by:
Capitation encourages physicians to minimize services provided by themselves.
88
A physician acts as a perfect agent when
When a physician makes the optimal decision that a fully informed patient would make, they are the perfect agent.
89
On average, the training costs (both money and time) for a physician are felt to explain
The training and returns from education explain virtually all of the high income for physicians.
90
Which of the following would increase the supply of physicians?
It would entice more people to entice more physicians to enter the profession,
More scholarships and grants to cover medical school tuition
91
The cost per patient day at Hospital A is much higher than the cost per patient day at Hospital B. This might be due to
If Hospital A sees sicker patients, then it will cost more per patient to treat these sicker patients. If hospital A is an academic hospital, residents and nurses in training will order additional tests beyond those done at Hospital B for pedagogical reasons. If hospital A has long-term labor contracts, it cannot act quickly to changes in the economy and views these contacts as an additional fixed cost in the short run. On the other hand, Hospital B can more efficiently choose a cost-minimizing input mix when these long-term contracts are not present
92
You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services. Your research indicates that the income elasticity of demand for the target market is +0.50; the price elasticity of demand is -0.15; and the cross-price elasticity of demand with respect to the price of services at Rural Hospital, a near-by hospital, is +0.35. Answer the following questions.
The price elasticity of demand is -0.15. If prices decrease by 10%, then the change in quantity = (-0.15)(-10) = 1.5% increases.
93
You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services. Your research indicates that the income elasticity of demand for the target market is +0.50; the price elasticity of demand is -0.15; and the cross-price elasticity of demand with respect to the price of services at Rural Hospital, a near-by hospital, is +0.35. Answer the following questions.
Economies of scale says as you expand production, the average cost decreases. For example, if total cost = 100 + 5Q, then the average cost is + 100/Q + 5. Note: As Q increases, the average cost decreases.
94
Monopolistic competition differs from perfect competition primarily because:
Monopolistic competition allows hospitals to differentiate their product.
95
Which of the following is a strategy used by a firm in monopolistic competition?
A firm tries to differentiate themselves from their competitors. This can be done by investing in technology that your competitors do not possess, or using advertising. Lobbying can be used to prevent new entrants into the market.
96
Pharmaceutical firms charge different prices in different countries after because
If demand is less elastic, the pharmaceutical company can charge more without losing more consumers.
97
Long lags in FDA approval lead to
The rationale for FDA regulation of drugs is presumably to provide a remedy for the lack of information that exists among both physicians and consumers when buying drugs.
98
When generic versions enter the market after the patent on a branded drug has expired
The branded drug loses its market share to the generic drug, but increases its price. The reason is that price-sensitive customers switch to the generic drug, and those who do not switch are not price-sensitive. Thus, the seller of the branded drug is able to raise its price.
99
Most pharmaceutical drug discoveries fail to lead to a marketable drug due to
Even when the drug performs better than a placebo, it still may not be able to compete with the currently accepted leading brand.
100
The economic rationale for patent protection for prescription drugs is the
Once the formulation of the drug is complete, the marginal cost of producing a drug is extremely small. Therefore, drug companies need patents to gain monopoly rights and recoup fixed- cost losses from research and development.
101
Regulators and advocates argue that licensure is appropriate because it:
Although licensure leads to higher rents for health professionals, it protects consumers from harm or low-quality care.
102
Policy intervention is needed to resolve a
A dynamic shortage is a temporary shortage that is resolved over time via market forces. A static shortage is present when a shortage exists in the long-run equilibrium of the market
103
Which of the following will occur if labor demand and supply simultaneously increase?
The quantity will definitely increase, but a small increase in demand and a large increase in supply will lead to a decrease in wages, while a large increase in demand and a small increase in supply will lead to an increase in wages.
104
Suppose the demand for labor is w = 300 – 2Q and the supply of labor is w = Q. If a price floor is set at $200, then the equilibrium
The price floor above the equilibrium causes an economic surplus where the wage will equal the price floor and the quantity will equal the quantity demanded.
105
Assume the government imposes price controls on physician wages where the wage cannot exceed $120. Let the demand for labor be w = 500 – Q and the supply of labor is w = 3Q.
The price ceiling is below the equilibrium price, therefore, w = $120. At this price, only 40 physicians will enter the market, which will lead to a shortage.
106
Jefferson County has 200,000 residents. During any given year, 2% of the population will develop a medical condition that requires 10 hours of physician treatment. Assuming the average physician works 2,000 hours per year, how many physicians are needed in Jefferson County?
(200,000)(.02)(10)/2000 = 20.
107
If the marginal product per dollar of physicians is lower than practical nurses, we should:
You want to continue hiring inputs from hire marginal product per dollar categories until the marginal product per dollar of the last input is equal to that of all other inputs.
108
Bullet County has 100,000 residents. During any given year, 2% of the population will develop a medical condition that requires 10 hours of physician treatment. Assuming the average physician works 2,000 hours per year, how many physicians are needed in Bullet County?
100,000)(.02)(10)/2000 = 10.
109
Suppose the demand for labor is w = 300 – 2Q and the supply of labor is w = Q. If a price floor is set at $50, then the equilibrium
The price floor is below the equilibrium; therefore, the market clears where demand intersects with supply.
110
Currently, the number of registered nurses
The number of employed registered nurses is about 2,400,000.
111
The education requirements for a nurse are
Three-year nursing school program
Two-year associate program
Four-year baccalaureate program
112
According to Buerhaus, et.al, there will be nurse shortage in the near future due to
An improved economic condition will lead to increases in the demand for medical services, thus they warrant an increase in the nurse workforce. Second, the current nurse workforce is aging and will reach retirement age soon
113
Immigrants constitute ______ of the growth in nurses between 2001 to 2008.
One-third of the increase in the number of RNs from 2001 to 2008 was the result of an increase in foreign-born RN
114
Dynamic shortages and static shortages occur in
Dynamic shortages can only exist in the short-run. In the long-run, these vacancies will eventually be filled
115
An increase in the mandated nurse-hospital ratio will lead to
According to researchers, there have been improvements in patient outcomes (such as a reduction of urinary track infections). The increase in the mandated nurse-hospital ratio will also cause hospitals to demand more nursing inputs. This will cause nurses’ wages to rise and the quantity of nurses to increase as well.
116
The vacancy rate of nurses within hospitals was highest during
1962
117
Question 8
10 / 10 pts
According to Gruber and Kleiner, in-hospital mortality due to a nurses’ strike
According to Gruber and Kleiner, in-hospital mortality due to a nurses’ strike
Increased by 19%
118
An increase in the minimum required nurse ratio will cause
An increase in both wages and demand for nurses
An increase in the minimum required nurse ratio will cause hospitals to demand more nurses. This will increase both the wage of nurses and the quantity of nurses employed.
119
Hospital diploma programs
A hospital could ensure a supply of nurses by educating the student for the first two years and then providing a stipend in the third year during training. Eventually, these students would enter into positions within the sponsoring hospital.
120
In his classic article entitled "Price Discrimination in Medicine," Kessel claimed that control over physicians’ pricing behavior was related to
Kessel claimed that control over physicians’ pricing behavior was related to the physician's need for hospital privileges and the prerequisite requirement of membership in the county medical society.
121
Which action led to a decrease in African-American physicians?
The Flexner Report caused the AMA to prohibit students from entering residency programs if they graduated from a nonaccredited medical school. This disproportionately affected African-Americans.
122
Large government subsidies allow medical schools to set tuition
The large educational subsidies received by the schools (and research grants and contracts that have also been used to subsidize educational activities) permit the schools to set tuition levels below actual costs of production.
123
Currently, tuition paid by medical students constitutes
Less than 5% of total revenue
Less than 5% of total revenue
124
patients identified as victims of negligence filed a malpractice claim
Less than 2% of
125
Which of the following is not a barrier to entry into the physician profession?
Membership in a medical society does not prohibit the practice of medicine.
126
Fee-splitting occurs when
Fee-splitting is a form of price competition and occurs when, for example, a surgeon splits their fee with the referring physician
127
Which action gave physicians a financial incentive to provide medical services and tests believed to result in better outcomes?
P4P is “Pay for Performance” that awarded physicians financial incentives for improvements in the patient’s health.
128
Physicians are believed to charge different patients different prices for the same service because they practice
Both the use of price discrimination and the hypothesis of the physician as a charitable agent led to physicians charging different prices to different patients for the same service.
129
How is advertising similar to physician inducement?
Supplied induce demand increases the number of medical services demanded beyond the optimal amount. Advertising does not affect the quality of the service provided. In both cases, there is no additional social value, although revenues do increase
130
According to Prabhu and Edelman (2009), the private rate of return for a physician is
According to Prabhu and Edelman (2009), the private rate of return for a physician is
131
Which allowed physicians to begin advertising their services without punishment?
Until the antitrust laws were ruled to be applicable to health care in the early 1980s, more highly trained physicians were prohibited by the medical profession from advertising their additional training and more recently acquired knowledge.
132
The American Medical Association helped to erect barriers to entry into the profession to
Many of the barriers to entry that were present did not allow good physicians to differentiate themselves (advertising). They decreased quality by not allowing competition (see the case of foreign-trained non-U.S. citizens).
133
Education, feedback, and surveillance programs are concerned with:
The objective is minimizing harm to patients.
134
Income Contingent Loan Repayment Plans (ICLRP) have been proposed to encourage medical school graduates to
By relating the ICLRP to the income of the physician, the program would not distort the preferences of physicians as to the population they serve or the type of practice they enter.
135
The net effect of the externality on welfare is equal to
The area (i) represents the costs to society due to over production.
