When Consumers Pay Only a Fraction of the True Cost

question 113

Multiple Choice

When consumers pay only a fraction of the true cost of medical services, their demand increases.The marginal cost of producing these extra services

• A)is greater than the marginal benefit consumers receive from them.
• B)is less than the marginal benefit consumers receive from them.
• C)is equal to the marginal benefit consumers receive from them.
• D)is zero due to the insurance payments.

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Definitions:

M1

A measure of the money supply that includes all physical currency and coins, demand deposits, traveler's checks, and other checkable deposits.

M2

M1 plus savings deposits, small-denomination time deposits, and money market mutual funds.

M3

M2 plus large-denomination time deposits.

M1

A category of the money supply that includes physical currency and coins, demand deposits, traveler’s checks, and other checkable deposits.