Asked by Alyssa Hirschy on Jun 11, 2024
Verified
Which of the following is not a reason why the demand for health care in the U.S. is quite price-inelastic?
A) People consider health care to be a luxury.
B) There are only a few, or no, substitutes.
C) Most consumers do not shop around, preferring a long-term relationship with their doctors.
D) Most patients have insurance, effectively removing their budget constraint for health care.
Price-Inelastic
A characteristic of a product or service whose demand does not significantly change with a change in its price.
Budget Constraint
The limitation on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.
Luxury
Goods or services that are considered non-essential but desirable and associated with high-quality and high price.
- Understand the notion of price elasticity in relation to the demand for health care services.
Verified Answer
TO
TMoney OfficialJun 17, 2024
Final Answer :
A
Explanation :
Health care is generally considered a necessity rather than a luxury, which is why its demand is price-inelastic. People need health care regardless of its cost, unlike luxury items which are bought more out of desire and can be foregone if prices rise.
Learning Objectives
- Understand the notion of price elasticity in relation to the demand for health care services.