A. External costs connected with health care suggest that society should be willing to pay more than the amount coming from the private sector alone. True. Because of the positive externalities generated from health care, the full benefits of this care are not fully realized and reflected in the price in the private market because the price is only determined by those directly involved in the transaction.

B. Consumers directly pay lower out-of-pocket expenses which causes them to overconsume. True. With insurance, consumers often only pay a co-pay and/or deductable. Because consumers only care about what they need to pay at the time they receive the service, they will be more likely to utilize the service.

C. About three-fourths of all persons are covered by health care insurance. False. The percentage of the population in the United States covered by health insurance is above 90 percent.

D. Society regards access to basic health care as a service. True. This is an accurate statement and the industry is classified as "service providing" by the Federal Government.