1. Cost-effectiveness analysis compares the value of an innovation with its cost. True or False
2. Cost cutting cannot increase profits. True or False
3. Insurance creates a principal-agent relationship that is not common outside of healthcare. True or False
4. Using marginal cost pricing you have set a price of $200. For the same service you accept a Medicare payment of $175. You would not change what you charge other patients just because Medicare changed its payment. True or False
5. A monopolistically competitive firm maintains its market share through
a. artificial product differentiation
b. relying on brand loyalty
c. non-price competition
d. all of the above
6. Which function of management is most concerned with risk minimization?
a. cost minimization
b. human resource management
c. complying with government regulations
d. entrepreneurial
7. A price discriminating firm will charge the lowest price when price elasticity of demand is
a. lowest
b. highest
c. equal to 1
d. zero