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

question 146

Multiple Choice

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

• A)Expenditures rise to $240
• B)Expenditures rise to $270
• C)Expenditures fall by $120
• D)Expenditures remain at $120

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Definitions:

Gross Profits

The financial gain obtained after subtracting the cost of goods sold from total revenue, indicating the efficiency of a company’s production process.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Expected Opportunity Loss

A statistical determination of potential loss due to not selecting the optimal choice among different options.

Gross Profits

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.