Chapter 14: Externalities in Health and Medical Care
This activity contains 10 questions.
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Which of the following statements about externalities is not true?
Examples of activities that have important externalities related to public
health include: vaccinations, smoking, and drunk driving.
When property rights are not fully defined, then externalities are inevitable.
An externality is any action or event that imposes costs or creates benefits
for others.
None of the above.
Public subsidies for vaccinations:
Are inefficient.
Only encourage excess vaccination.
Are the most common public policy tool employed to increase the fraction of
persons with vaccinations.
May correct the market failure that comes from the positive externalities
associated with vaccination.
Which factors contribute to a potential undersupply of vaccines?
Demand is highly uncertain, since the target organisms can mutate and
render the vaccine ineffective.
Vaccine production is a fragile process; unforeseen production problems (or
line risk) can render the vaccine ineffective.
Mass vaccination strategies compound the liability risks of producers.
All of the above.
Public policies to encourage vaccination in the U.S. that have been
implemented or recently proposed include:
Creating government stockpiles of vaccines.
Mandated coverage of vaccination in private health insurance plans
Government pre-purchase of vaccines prior to approval for use by the FDA.
A no-fault compensation system for vaccine-related injuries.
All of the above.
None of the above
The externalities from tobacco usage include:
The overall increased mortality risk of smokers.
The risk of lung cancer for smokers.
The annoyance and irritation from smoke that is experienced by nonsmokers.
All of the above.
Public policy initiatives that address the externality from smoking
tobacco include:
A ban on smoking during airline flights.
Excise taxes on tobacco products.
Local ordinances that prohibit smoking in public buildings.
All of the above.
Information about the health consequences of smoking is a public
good because:
Information is non-rival and non-excludable.
It is produced by the government.
It helps people make better decisions
All of the above.
Why is there so little research on medical effectiveness?
Clinical trials are not cost-effective.
The information produced by medical effectiveness studies is a public good,
so there's little incentive for private actors to engage in such research.
Knowledge about the effectiveness of medical interventions is difficult to
communicate
All of the above.
Which of the following statements about blood transfusion is not
true?
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The probability of acquiring AIDS via a single blood transfusion is
approximately 1%.
Economists argue that incomplete property and liability rules contribute to
the dangers of infection from tainted blood.
Titmus argued that the nature of a nation's blood supply is an indicator of its
character.
None of the above.
If Mr. Jones chooses to use Doctor A instead of Doctor B, then:
No externalities are created by this action.
Jones has created a negative externality for Doctor B.
Jones has created a positive externality for Doctor A.
Jones creates both a positive and a negative externality.