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:

Price Elasticity

A calculation that determines how significantly a good's demanded quantity is influenced by price changes, revealing consumer sensitivity to price shifts.

Labor's Share

The portion of national income or output that is allocated to workers in the form of wages, salaries, and other forms of compensation.

Total Costs

The full price of manufacturing, which includes both constant and fluctuating expenses.

Labor Cost

The total expenditure incurred by a company to pay its employees, including wages, benefits, and taxes.