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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Definitions:

Work Slowdown

A deliberate reduction of productivity by workers, often to protest working conditions or wages, without fully going on strike.

Union Members

Individuals who belong to a labor union, an organization that represents workers in negotiations with employers over wages, benefits, and working conditions, aiming to improve members' economic status and work environment.

United Automobile And Aerospace Workers

A labor union that represents workers in the automobile, aerospace, and agricultural implement manufacturing industries in the United States.

Monopsony

Monopsony is a market condition where there is only one buyer for a product or service, giving the buyer substantial control over the market and the terms of purchase.