The U.S. health care market is characterized by all of the following, except:

A) asymmetric information between patients and physicians
B) price-elastic demand for health care services
C) price distortions created by third-party payment systems
D) positive externalities

ANSWER:

B The demand for healthcare services tends to be price inelastic because there are few good substitutes, consumers do not “shop around” for medical services, and most consumers are insured, which reduces their price sensitivity.