Consumers are far more likely to pay for dental services out

Consumers are far more likely to pay for dental services out-of-pocket than for hospital care. What implications does this fact have for the growth of total spending on dental service and hospital care? Why?

Solution

Larger out-of-pocket spending means less people go fo dental services or people with extreme need would go for dental services. On the other hand, total spending on hospital care would grow faster than dental care because in hospital care people do not pay for the marginal cost of hospital care which makes them to overconsume the service.