All of the Following Statements About the New Health-Care Legislation

question 12

Multiple Choice

All of the following statements about the new health-care legislation are true EXCEPT

• A) excluding people with preexisting conditions from insurance plans is banned.
• B) Medicaid coverage is guaranteed for individuals making up to $250,000 a year.
• C) health insurance companies pay a new tax.
• D) employers that do not offer health insurance coverage are taxed.
• E) state health-insurance exchanges will be created where individuals and small businesses can buy insurance.

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Definitions:

Income Effect

The change in an individual's consumption choices that results from a change in their real income or purchasing power.

Substitution Effect

The substitution effect occurs when consumers replace cheaper items for more expensive goods due to changes in relative prices, holding utility constant.

Slutsky Compensated Demand Curve

Represents consumer demand by adjusting for changes in purchasing power, illustrating how quantity demanded varies with price, holding utility constant.

Ordinary Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, with all other factors being held constant.