CHAPTER 13 (Santerre and Neun, 2006)
Part A
1. Describe three benefits associated with pharmaceutical products.
2. What is the economic rationale behind a patent?
3. Why might the FDA tend to delay the drug approval process? Explain in terms of type 1 and type 2 errors.

4. Physician assistants have long argued that they have the ability to provide as much as 70 percent of the medical services provided by primary care physicians at a much lower cost. Yet government regulations limit their ability to work independently of physicians. Explain what would happen to the level of competition in the physician services market if all the statues limiting the activities of physician assistants were eliminated.

5. Discuss the theoretical issues surrounding the supplier-induced demand theory.
6. Who is the largest buyer of hospital services?
Part B
1. We have learned that production efficiency is achieved when society is receiving the maximum amount of output from its limited resources. Explain how cost-benefit analysis can be utilized to achieve that outcome.

2. In your own words describe the difference between cost-benefit and cost-effectiveness analysis.

3. You have just been hired by your city’s department of health. Your first task is to use cost-benefit analysis to evaluate a smoking awareness program that the department has been promoting for two years. Under the smoking awareness program, the department of health sends a team of health care professionals to various private firms free of charge to lecture to employees about the risks of smoking. The lecture takes one hour and is given during the work day. Describe the costs and benefits you should consider in your analysis.

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