Given the Current Structure of Health-Care Finance, Which of the Following

question 59

Multiple Choice

Given the current structure of health-care finance, which of the following is most likely to occur when the baby boom generation begins to retire and the elderly population increases rapidly during the years following 2010?

• A) The demand for health-care services will decrease.
• B) The prices of health-care services will grow less rapidly than has been the case during the last three decades.
• C) The real (adjusted for inflation) expenditures on Medicare and the taxes to finance the program will tend to decline.
• D) The health-care inflation and spending growth of recent decades will continue or even accelerate.

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Definitions:

Natural Monopoly

A market structure where a single firm can produce the entire market supply of a particular good or service at a lower cost than any potential competitor.

Network Effects

Network effects occur when the value of a product or service increases as more people use it, making it more attractive and beneficial to users.

Simultaneous Consumption

The same-time derivation of utility from some product by a large number of consumers.

Specialized Inputs

Resources or materials that are tailored for specific tasks or industries, enhancing the efficiency and quality of production.