"When a third party (for example, an insurance company or the government) pays all or most of the cost of a good or service, the incentive of consumers to shop for the best value per dollar spent and of producers to offer the item at an economical price is substantially reduced." This statement is
a. essentially true.
b. false; consumers will still have a strong incentive to search for the most economical price even if someone else is paying the bill.
c. false; producers will still have a strong incentive to keep prices low even if consumers are non-responsive to price differences among suppliers.
d. false; the party paying for the good will not influence the incentive of either consumers or producers to economize.
A
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Recall the Application. If country A has a lower overall income tax rate than country B, and labor can freely and easily move between the two countries, ________ in country B will tend to ________
A) labor supply; decrease B) labor demand; decrease C) labor demand; increase D) labor supply; increase
As of 2013, the U.S. monetary base has ________ its 2007 level, the level held before the 2008 financial crisis, as a direct result of ________
A) quadrupled; the Fed's actions with quantitative easing B) doubled; the Fed's actions with quantitative easing C) tripled; the Fed's actions with quantitative easing D) quadrupled; the Fed's actions and the resulting reduction of the money multiplier E) tripled; the Fed's actions and the resulting reduction of the currency drain