Which one of the following statements is NOT true?
A) The classical model assumes that people suffer from money illusion.
B) The classical model assumes that no single seller of a commodity can affect its price.
C) The classical model assumes that pure competition exists.
D) The classical model assumes that people are motivated by self-interest.
A
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In the United States, the bulk of health care spending is paid by health insurance companies
Such a system is also called a third-party payer system where consumers of health care pay a nominal fee and the rest are paid by the health insurance provider. Why might such a system lead to an inefficient outcome? A) Consumers fearing that excessive use of health care services may lead to a rise in insurance premiums tend to under-consume health care services. B) Health insurance companies have an incentive to control cost and therefore tend to deny consumers many cutting edge medical treatments. C) Consumers have an incentive to over-consume health care services because they pay prices well below the cost of providing these services. D) Physicians concerned that insurance companies may not approve payments tend not to order expensive tests for their patients.
In constructing the Human Development Index, high income levels are given less than proportionate weight because
a. Items bought by rich people are luxuries, not necessities. b. United Nations bureaucrats are prejudiced against the rich. c. Dollars received by rich people may have a lower marginal utility than dollars received by poor people. d. Items bought by rich people create more pollution than those bought by the poor. e. All of the above are valid reasons.