When a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that the
A) demand for the good will decline.
B) consumers of the good will have less and less incentive to economize on its use.
C) suppliers of the good will have a stronger incentive to provide the good at low prices.
D) prices of the good will tend to decline with the passage of time.

Question

Quizplus · Accepted Answer

When a third party covers more of the cost, consumers are less concerned about the price, leading to less incentive to economize.

When a Third Party Pays a Larger and Larger Share