skeleton notes 6 part 2

Question 1

consumers lack ______ to shop around. what kind of demand?

Answer 1

time
inelastic

Question 2

consumers face high search ______

Answer 2

costs

Question 3

used to measure the level of concentration in the market

Answer 3

Herfindahl Hirshman Index

Question 4

what is the formula for HHI

Answer 4

Σsi^2

Question 5

what is si

Answer 5

market share for a firm

Question 6

a higher h-index suggests ____ concentration, _______ competition

Answer 6

more
less

Question 7

find HHI for if 5 hospitals serve equal portions of the local population

Answer 7

H = (1/5)^2 + (1/5)^2 + (1/5)^2 + (1/5)^2 + (1/5)^2
=5(1/2)^2

Question 8

TYPICALLY more competition leads to better ______ and _________

Answer 8

quality
lower price

Question 9

Ubiguity of _______ hinders price competition

Answer 9

insurance

Question 10

patients are typically referred to hospitals by ________ so hospitals compete for ______

Answer 10

physicians
physicians

Question 11

greater competition among hospitals for physicians can result in redundancy and overconsumption of medical technologies/services

Answer 11

medical arms race hypothesis

Question 12

this can actually increase costs without improving quality

Answer 12

medical arms race hypothesis

Question 13

(T or F?) hospitals and insurers both private and public never negotiate rates

Answer 13

false

Question 14

rates vary with relative ____________________ of hospital and insurer

Answer 14

bargaining power

Question 15

(T or F?) the same hospital may receive different rates from different insurer

Answer 15

true

Question 16

hospital charges not covered by out-of-pocket payments, public insurance, or private insurance (upwards of 7%)

Answer 16

uncompensated care

Question 17

higher prices paid by richer payment cover care given to the poor (cross-subsidation)

Answer 17

cost shifting

Question 18

What does Fuchs say about the relationship between efficiency, hospital size and number of services offered?

Answer 18

there are substantial economies of scale for hospitals.
larger hospitals –> greater efficiency and \more services