Consider the figure to the right and assume that it is the market for health-care services. when the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25% What is the effect on the price of health care services over time?
A. it increases because demand increases by more than supply
B. it decreases because demand increased by less than supply
C. it increases because demand increased by less than supply
D. it decreases because demand increased by more than supply
Ans: A. it increases because demand increases by more than supply
You might also like to view...
Suppose that many consumers tend to over-state the discount rate that should be used for computing the net present value of education, just as they do when making investments in durable goods like cars and appliances
What would happen if consumers (as a group) started to use lower discount rates when making decisions about their education? A) NPV of a degree declines, demand for eduction declines B) NPV of a degree declines, demand for education increases C) NPV of a degree increases, demand for education declines D) NPV of a degree increases, demand for education increases
In a world of perfect information, if consumers could costlessly contract with private contractors to produce a good and there were no economies of scale,
a. firms would be unnecessary b. markets would be unnecessary c. consumers would be unnecessary d. consumers would face greater production costs e. firms would be more efficient than the market
If the MPC = 1, the spending multiplier is:
a. infinite. b. zero. c. 10. d. 100. e. 1.
When more and more units of a variable factor are combined with constant amount of a fixed factor, such that the variable factor becomes abundant compared to the fixed factor, the output will eventually:
a. increase at an increasing rate. b. increase at a diminishing rate. c. increase at a constant rate. d. become constant. e. fall to zero.