Nonprofit

Question 1

Type of Organizations

Answer 1

not-for-profit organizations (hereinafter “NPOs”)

Nonstockcorporations

Question 2

are typically
organizedas “non-stockcorporations” registeredunder
theCorporationCode.

Answer 2

not-for-profit organizations (hereinafter “NPOs”)

Question 3

can be for med for charitable, religious,
educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, such as
trade, industry, agricultural and like chambers, or any
combination thereof(Section88,CorporationCode).

Answer 3

Nonstock corporations

Question 4

Exemption from income tax is extended to a broad range of
organizational forms, including

Answer 4

1. Non-stock corporations organized exclusively for
   religious, charitable, scientific, athletic or cultural
   purposes, or for the rehabilitation of veterans;
2. Civic leagues or organizations operated exclusively for the
   promotion of social welfare; and
3. Non-stock, non-profit educational institutions (Section
   30(e), (g), and (h), Tax Code)

Question 5

People commonly assume that nonprofits are firms organized to
provide ______ or community services and that they
obtain their revenues largely from _____

Answer 5

charitable goods, donations.

Question 6

Healthcare nonprofits obtain more than 90 percent of their revenues
from

Answer 6

“sales and receipts.”

Question 7

In economic language, the important distinction of the nonprofit is the

Answer 7

non distribution constraint.

Question 8

This means that no one has a legal claim on the nonprofit’s residual,
the difference between the revenues and its costs.

Answer 8

non distribution constraint.

Question 9

This means that no one has a legal claim on the nonprofit’s ______
the difference between the______

Answer 9

residual, revenues and its costs.

Question 10

Distinctions between
nonprofit and for-profits

Answer 10

First, nonprofits
are exempt from corporate income taxes and often from property and sales taxes.

❑ Second, donations to
nonprofits receive
favorable tax treatment.

Question 11

In an Economy, there
are 3 types of Firms/Economic
Institutions

Answer 11

Private Profit-Making
Firms

2. Government
3. Voluntary Nonprofit
   Enterprises

Question 12

Re-invest profits in the hospital or return them to owners.

Answer 12

FP

Question 13

Re-invest profits in the hospital or return them to the community

Answer 13

NFP:

Question 14

Pay corporate income and local property taxes

Answer 14

FP

Question 15

Raise capital through the issuance of stocks

Answer 15

FP

Question 16

Borrow at tax-exempt rates

Answer 16

NFP

Question 17

receive tax-deductible donations.

Answer 17

NPF

Question 18

provide community benefits such as charity care, emergency care, and health education

Answer 18

NFP and FP

Question 19

Providers of Unmet dmands for Public goods

Answer 19

Nonprofits

Question 20

We view a perfectly competitive industry under certain
circumstances as economically efficient, and empirical data
suggest that competition often fosters growth

Answer 20

Burton Weisbrod’sanalysis (1975)

Question 21

Under this account, we need government enterprises only
in cases where competitivemarketsfail.

Answer 21

Burton Weisbrod’sanalysis (1975

Question 22

As this theory unfolds, we need nonprofits, in turn, when government enterprise also fails.

Answer 22

Burton Weisbrod’s analysis (1975

Question 23

is an uncompensated direct effect of the
production or consumption of a good on persons other than
the producers or consumers.

Answer 23

An externality

Question 24

Free markets tend to _______ for which there
exist significant external benefits.

Answer 24

underproduce goods and services

Question 25

The________ is the sum of the private benefits and the external benefits to the community.

Answer 25

benefit to society

Question 26

Because demand will represent only the private benefits, it will understate society’s benefits and give a false or inadequate signal to the market. The market then produces less than the amount that would maximize net social benefits. This is economically inefficient, and we call this situation a case of

Answer 26

market failure

Question 27

Upon introducing the concept of Externality, we have proven that

Answer 27

markets fail.

Question 28

The existence of a large externality raises the possibility of a role for

Answer 28

government

Question 29

T or F If we recognize that markets may fail, we must recognize that governments too may fail to act efficiently

Answer 29

T

Question 30

T or F The vaccination is a private good

Answer 30

T

Question 31

The vaccination is a private good with an external benefit, but it has

Answer 31

public good aspect.

Question 32

What are the characteristics of a PURE PUBLIC GOOD?

Answer 32

Nonexcludable Nonrival

Question 33

means that people cannot be economically excluded from consuming the good even if they refuse to pay for it

Answer 33

Nonexcludable

Question 34

means that one person can consume the good without depleting it for others.

Answer 34

Nonrival

Question 35

Why is the Government the one providing this public good?

Answer 35

If private enterprise tried to attempt to provide defense, it would find many citizens choosing to be free riders.

Question 36

A______ is a person who consumes the public good but refuses to pay.

Answer 36

free rider

Question 37

Only ______ has the power to force consumers to pay.

Answer 37

government

Question 38

T or F A donation to the health of others has the characteristics of both a public good and a private good.

Answer 38

T

Question 39

which argues that donations to public goods motivate the donor as both private and public goods.

Answer 39

Richard Steinberg’s (1986, 1987):

Question 40

If you donate toward the health of a poor person, you may get a

Answer 40

“warm glow”

Question 41

:an increase in utility from the act of giving; Arrow, 1975; Andreoni, 1990

Answer 41

WARM GLOW

Question 42

Who define WARM GLOW as an increase in utility from the act of giving

Answer 42

Arrow, 1975; Andreoni, 1990

Question 43

The ______ may come from the act of donating or simply from the pleasure in knowing that a suffering person’s health improved.

Answer 43

warm glow

Question 44

However, other charitably minded persons will also have this pleasure, whether or Not they have donated. They are _______who receive an external benefit free. The charity market then provides too little charity to be efficient.

Answer 44

free riders

Question 45

Models of Non profit Hospital Behavior

Answer 45

1. The Quality-Quantity Nonprofit Theory 2.The Profit- Deviating Nonprofit Hospital 3. The Hospital as Physicians’ Cooperative

Question 46

The Quality-Quantity Nonprofit Theory the first task is to

Answer 46

Identify the objective of the hospital decision makers.

Question 47

First task: Identify the objective of the hospital decision makers. 2 OPTIONS

Answer 47

1. Utility-maximization 2. Profit-maximization

Question 48

Who are the decision makers?

Answer 48

1. Board of Trustees 2. CEO or Hospital Administrator-the trustees’ decision-making agent 3. Physician Staff-the arbiters of medical decision-making

Question 49

the trustees’ decision-making agent

Answer 49

CEO or Hospital Administrator-

Question 50

-the arbiters of medical decision-making

Answer 50

3. Physician Staff

Question 51

The utility maximizing model, most clearly approximating the altruistic firm, was proposed by

Answer 51

Joseph Newhouse (1970).

Question 52

Newhouse, the hospital’s objective was to ______ of the decision makers.

Answer 52

maximize the utility

Question 53

T or F In Newhouse’s model, the hospital’s preferences are defined over quantity and quality of output.

Answer 53

T

Question 54

could be measured in several ways, but assume we measure it by the number of cases treated

Answer 54

a. Quantity of Output

Question 55

can entail many different characteristics of the care provided.

Answer 55

Quality of Output

Question 56

Some top decision makers may value the

Answer 56

quality or beauty of the hospital structure, and others may emphasize expertise of the physician or nursing staff. Still others may emphasize prestige in the medical community, and yet others may stress the quality of the tender loving care provided.

Question 57

T or F The hospital selects a combination of quantity and quality that maximizes cost.

Answer 57

false The hospital selects a combination of quantity and quality that maximizes utility

Question 58

It faces the ______, which is the sum of patient generated revenues plus donations equal the hospital’s costs

Answer 58

budget constraint

Question 59

It also faces the

Answer 59

nondistribution constraint.

Question 60

Thehospitalselectsacombinationofquantityandqualitythatmaximizesutility. ❑ It faces the budget constraint, which is the sum of patient generated revenues plus donations equal the hospital’s costs. ❑ It also faces the nondistribution constraint

Answer 60

The Quantity-Quality Frontier

Question 61

The constrained utility maximization point occurs at a point of tangency between the ______ and _______

Answer 61

frontier and the highest indifference curve attainable.

Question 62

see the nonprofit differently, as a mix of altruism and profit motives.

Answer 62

Lakdawalla and Philipson (2006)

Question 63

Their model makes clearer the entry and exit responses of nonprofits to changes in market conditions and government regulation

Answer 63

The Profit- Deviating Nonprofit Hospital Lakdawalla and Philipson (2006)

Question 64

for-profit goal be to maximize its profits πF nonprofit’s “profit” πN, πN = πS + D > 0

Answer 64

U = U(q, π)

Question 65

Notice that the profit-deviating model described this way includes the ____ and ____

Answer 65

purely altruistic model pureprofit maximizing model

Question 66

where decision makers have no concern for the health of the community separate from profit)

Answer 66

pure profit maximizing model

Question 67

(a version where the decision maker has no concerns for personal profit)

Answer 67

purely altruistic model

Question 68

Adifferent account of the nonprofit hospital comes from theories that believe that hospitals maximize the pecuniary gain to the decisive set of decision makers.

Answer 68

The Hospital as Physicians’ Cooperative

Question 69

describe the nonprofit hospital as a “physicians’cooperative,”assumingthat thehospital is controlled by a physician staff who operate the hospital to maximize their net incomes

Answer 69

Mark Pauly and Michael Redisch (1973)

Question 70

Mark Pauly and Michael Redisch (1973) describe the nonprofit hospital as a _________assuming that the hospital is controlled by a physician staff who operate the hospital to maximize their net incomes.

Answer 70

“physicians’ cooperative,”

Question 71

This view of the hospital focuses on the “full price” of the hospital care, meaning the total charges to the patient by both the hospital (K, L) andthephysician(M)

Answer 71

The Hospital as Physicians’ Cooperative

Question 72

The Hospital as Physicians’ Cooperative view of the hospital focuses on the _______of the hospital care, meaning the total charges to the patient by both the hospital (K, L) and the physician(M)

Answer 72

“full price”