"When a Third Party (For Example, an Insurance Company or the Government)

question 35

Multiple Choice

"When a third party (for example, an insurance company or the government) pays all or most of the cost of a good or service, the incentive of consumers to shop for the best value per dollar spent and of producers to offer the item at an economical price is substantially reduced." This statement is

• A) essentially true.
• B) false; consumers will still have a strong incentive to search for the most economical price even if someone else is paying the bill.
• C) false; producers will still have a strong incentive to keep prices low even if consumers are non-responsive to price differences among suppliers.
• D) false; the party paying for the good will not influence the incentive of either consumers or producers to economize.

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Definitions:

Passionate Love

A state of intense emotional and physical attraction towards another person, often characterized by infatuation and desire for union with them.

Physical Arousal

The physiological state of being alert and responsive to stimuli, often involving increased heart rate, blood pressure, and sensory alertness.

Companionate Love

A deep, affectionate attachment we feel for those with whom our lives are intertwined, characterized by mutual respect, trust, and affection.

Extremely Attractive

Referring to a high degree of physical appeal or beauty, often eliciting strong positive reactions from observers.