5 The Labor Market for Physicians Comprehension Questions Indicate whether the statement is true or false,and justify your answer.Be sure to cite evidence from the chapter and state any additional assumptions you may need. FALSE.In the United States,at least,physicians must complete one year of residency af- ter medical school to become eligible to apply for a license. hammynal t zu(t)and z()i equal to the internal rate of return of w(t),the net present value of choosing wover z is zero. f the inte 4.The number of U.S.medical schools decreased drastically between 1900 and 1950. were supplying substa Hard medica 5.The full economic cost of medical school includes mainly tuition,room,and board for the school. 1 5 The Labor Market for Physicians Comprehension Questions Indicate whether the statement is true or false, and justify your answer. Be sure to cite evidence from the chapter and state any additional assumptions you may need. 1. Physicians in the United States are licensed to practice medicine immediately after they com￾plete medical school. FALSE. In the United States, at least, physicians must complete one year of residency af￾ter medical school to become eligible to apply for a license. 2. The internal rate of return is defined as the interest rate that makes the net present value of an investment stream exactly equal to zero. TRUE. The IRR of an investment is the interest rate r⇤ that would imply a net present value of 0 for that investment versus the next best alternative. 3. Consider two investment streams w and z which pay out some amount, w(t) and z(t), in each period t. (The amount may be negative in some periods). If the interest rate is exactly equal to the internal rate of return of w(t), the net present value of choosing w over z is zero. TRUE. This is the definition of the internal rate of return. If the interest rate equals the IRR, the two investments are equally appealing. 4. The number of U.S. medical schools decreased drastically between 1900 and 1950. TRUE. This trend was a result in part of the release of the Flexner report, which argued that most U.S. medical schools were supplying substandard medical education. 5. The full economic cost of medical school includes mainly tuition, room, and board for the school. FALSE. One of the principal costs of medical school is the opportunity cost of time spent in school as opposed to working. 1