209. Third-party payer systems for health-care services include payments made by

Question

209. Third-party payer systems for health-care services include payments made by:
A) doctors.
B) patients.
C) hospitals.
D) insurance companies.

4. The price elasticity of demand is:
A) always positive.
B) always greater than 1.
C) usually equal to 1.
D) always negative.

46. Which of the following will lead to a decrease in total revenue?
A) price goes up and demand is perfectly inelastic
B) price goes up and demand is price inelastic
C) price declines and demand is price elastic
D) price increases and demand is price elastic

Explanation / Answer

209. A third-party is someone outside of the direct exchange. The direct exchange is made between the hospital and the patient. The doctor isn't actually involved in the exchange at all. He or she is paid separately by the hospital. The third party paying for the treatment is the insurance company. The correct answer is D. 4. This will depend on how your professor defines elasticity of demand. Some professors define it in terms of absolute value. Check to see how yours defines it. But I would say the correct answer is D because all demand curves are downward sloping. So, all price elasticities are negative. 46. Revenue will decrease if the price increases and the demand is price elastic because price elasticity implies that the percentage decline in quantity will outweigh the percentage increase in price. R = PQ. So, overall revenue will decrease. The answer is D.

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