As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?
a. Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising.
b. No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result.
c. Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party.
d. No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels.
B
You might also like to view...
If the market for bicycles is efficient, then
A) no more bicycles can be produced. B) marginal benefit exceeds marginal cost. C) consumer surplus must be greater than producer surplus. D) it is not possible to produce more bicycles without sacrificing another, more highly valued good. E) consumer surplus must equal producer surplus.
A measure of how much debt an investor takes on in making an investment is referred to as
A) asset management. B) the debt-equity ratio. C) securitization. D) leverage.
If the market price ever drops below a firm's average variable costs at its profit-maximizing level of output the:
A. firm should shut down immediately. B. loss-minimizing quantity of output is zero. C. firm is not earning enough revenue to cover the variable costs of production. D. All of these are true.
If the marginal propensity to consume (MPC) equals 0.9, the multiplier is _____
a. 1 b. 2 c. 5 d. 10 e. 12