Economic theory indicates that as a larger share of medical services are paid for by a third party (for example, insurance companies or the government) rather than directly by the consumer,
A) consumers will have a stronger incentive to economize.
B) consumers will have a weaker incentive to economize and the prices of medical services will rise more rapidly than would otherwise be the case.
C) consumers will have a weaker incentive to economize, but medical service suppliers will have a stronger incentive to keep prices low.
D) the suppliers of medical services will have more incentive to economize.

Question

Quizplus · Accepted Answer

When a third party pays for medical services, consumers are less concerned about the cost, leading to less incentive to economize. This can result in higher demand and potentially higher prices for medical services.

Economic Theory Indicates That as a Larger Share of Medical