Economic Theory Indicates That the Growth of Subsidies to Healthcare

question 10

Multiple Choice

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

• A) lead to higher healthcare prices.
• B) lead to lower healthcare prices.
• C) reduce the incentive of consumers to economize.
• D) increase the incentive of healthcare providers to provide their services at a low cost.
• E) do both a and c above.

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Definitions:

Production

The process of creating goods or services using inputs like labor, capital, and raw materials.

Bounded Rationality

The concept that decision-making is limited by the information, cognitive limitations, and time constraints.

Opportunity Cost

The cost of foregone alternatives when one option is chosen over another, essentially the benefits you could have received by taking an alternative action.

Marginal Benefit

The increased benefit derived from the utilization of one more unit of a good or service.