One of the Challenges for Development Economists Working in Health

question 43

Multiple Choice

One of the challenges for development economists working in health care is to figure out a way to:

• A) force doctors to practice good medicine.
• B) give incentives to families to make better health care choices.
• C) decrease the frequency of preventative medicine, such as immunizing children.
• D) All of these statements are true.

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Definitions:

Weighted Average Cost of Capital

Weighted Average Cost of Capital (WACC) is a calculation of a company's cost of capital in which each category of capital is proportionately weighted.

Tax Shield

The reduction in income taxes that results from taking an allowable deduction from taxable income, such as interest on debt.

Capital Structure

The mix of debt and equity financing a company uses to fund its operations and growth.

M&M Proposition II

Modigliani and Miller's Proposition II states that a company's cost of equity increases as it increases its leverage due to the risk premium on equity.