Demand for a service like medical care:
A)is an example of the negative substitution effect.
B)is perfectly inelastic.
C)is perfectly elastic.
D)is sensitive to the time component of cost.
E)varies directly with the price of that care.

Question

Demand for a service like medical care:​
A)is an example of the negative substitution effect.
B)is perfectly inelastic.
C)is perfectly elastic.
D)is sensitive to the time component of cost.
E)varies directly with the price of that care.

Quizplus · Accepted Answer

The demand for medical care is sensitive to the time component of cost as it involves the opportunity cost of time spent seeking and receiving care. Therefore, option D is the correct choice. Option A is incorrect because the substitution effect refers to the change in demand for one good in response to a change in the price of a substitute good. Option B is incorrect because perfectly inelastic demand means that the quantity demanded remains constant regardless of the price, which is not the case for medical care. Option C is incorrect because perfectly elastic demand means that any increase in price will result in zero quantity demanded, which is not the case for medical care. Option E is incorrect because the demand for medical care does not vary directly with its price, but is influenced by other factors like insurance coverage, income, and health status.

Demand for a Service Like Medical Care:​

Demand for a Service Like Medical Care: