1. True or False? An externality occurs when a third party is affected by the two parties directly involved in a transaction or exchange but does not have a direct way of impacting the outcome.

2. True or false? A physician has a financial incentive to change treatment patterns when paid by salary.

3. Under the DRG system, assume a conversion rate of $525 per unit and a relative weight of 2.65, then a hospital would receive how much for a patient with this diagnosis?

Group of answer choices

$525

$198.11

$2,782.50

$1,391.25

4. Medicare Advantage plans are paid a capitated amount to provide

Group of answer choices

All Part A, B, and D benefits

All Part A and D benefits

All Part A and B benefits

All Part B and D benefits

5. Explain why individual or small-group insurance tends to be more expensive than large-group insurance.

6. What are the conditions that must be met in order for the market for insurance to perform efficiently?