Question

Health insurance often pays 80 percent of health care costs. This situation will encourage the rational consumer to _________.

Answer 1

correct answer is Use more medical services than they would if they had to paid the full price

Step-by-step explanation:

given data

pay cost = 80 percent of health care

solution

when there is no insurance, consumer consumes medicinal service

until marginal benefit is equal to marginal cost .................1

here when insurance = 80 percent

then consumer will pay 20% cost at optimal marginal benefit

so

marginal benefit = 0.2 × marginal cost

so insurance more medical services will be taken compared to no insurance