If the Price of a Good or Service Rises,households Have

question 8

Multiple Choice

If the price of a good or service rises,households have to choose whether to buy less of that good or service or spend less on other goods and services.Studies have shown that when the price of health care rises,

• A) people cut back on their spending of medical services.
• B) people continue to consume the same amount of medical services and reduce spending on other goods and services, because medical services are viewed as a necessity.
• C) people consume more medical services because these services are viewed as being more valuable, and they significantly reduce spending on other goods and services.
• D) there is no correlation between the rising prices of medical services and the quantity of these services consumed.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving more weight to some values.

Ordinary Shares

Equity securities representing ownership in a company, giving the shareholder voting rights and a share in the company's profits through dividends.

Dilutive Potential

The possibility that the issuance of additional securities could decrease earnings per share or decrease an ownership interest.

After-tax Effect

The impact of taxes on a company's financial transactions, typically focusing on the net result after accounting for the taxation impact.