Which of the Following Would Increase the Incentive of Consumers

question 284

Multiple Choice

Which of the following would increase the incentive of consumers to economize and of producers to provide medical services at economical prices?

• A) substitution of catastrophic health insurance plans for low deductible, low co-payment plans
• B) more reliance on medical savings accounts rather than insurance
• C) equalization of tax treatment between out-of-pocket medical expenses and employer-provided health insurance
• D) all of the above

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Definitions:

Investment

The action or process of investing money for profit or material result.

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used in capital budgeting.

Independent Projects

Projects in a company that can be selected or rejected independently of one another, without affecting the profitability or potential of other projects.

Conventional Cash Flows

A series of net income figures expected to be generated by an investment, starting with a negative cash flow at the beginning (investment outlay), followed by a series of positive cash flows.