Refer to the Graph Shown That Depicts a Third-Party Payer

question 39

Multiple Choice

Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to expenditures by consumers in this market if a $2 co-pay is established compared to a free-market equilibrium?

• A) Expenditures fall by $30
• B) Expenditures rise by $90
• C) Expenditures fall by $120
• D) Expenditures remain at $150

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Definitions:

Union Probabilities

The probability of the occurrence of at least one of two or more events.

Likelihood Probabilities

Refers to the use of probabilities to express the plausibility of parameter values given a sample of data, central in statistical inference.

Prior Probabilities

The likelihoods of different outcomes or events before new evidence is considered, used in Bayesian statistics.

Posterior Probabilities

The probabilities assigned to hypotheses or outcomes after taking into consideration the relevant evidence and the prior probabilities.