Economic Theory Indicates That as a Larger Share of Medical

question 180

Multiple Choice

Economic theory indicates that as a larger share of medical services are paid for by a third party (for example, insurance companies or the government) rather than directly by the consumer,

• A) consumers will have a stronger incentive to economize.
• B) consumers will have a weaker incentive to economize and the prices of medical services will rise more rapidly than would otherwise be the case.
• C) consumers will have a weaker incentive to economize, but medical service suppliers will have a stronger incentive to keep prices low.
• D) the suppliers of medical services will have more incentive to economize.

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