As the Share of Healthcare Expenditures Paid for by Third

question 121

Multiple Choice

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

• A) Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising.
• B) No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result.
• C) Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party.
• D) No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels.

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Definitions:

Sample Space

The collection of all potential results or outcomes from a probabilistic experiment.

Discrete Random Variables

Random variables that take on a countable number of distinct values.

Continuous Random Variables

Variables that can take on any values within a continuous range, as opposed to discrete variables that have specific, separate values.

Normal Distribution

It's a probability distribution where the frequency of data decreases as the distance from the mean increases, exhibiting symmetry about the mean.