Government programs such as Medicare substantially subsidize health care purchases by some consumers in the U.S. economy. Who benefits from these subsidies? How do they affect the price of health care? If you are not a recipient of this program, are you made better or worse off by the subsidy? Explain
The subsidy will increase the price of health care. The benefit will be split between consumers and producers depending on the elasticities of supply and demand. If you do not receive the subsidy, you are worse off because of the higher prices for health care.
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If the economy is in long run equilibrium and then aggregate demand increases, in the long run the increase in aggregate demand means that the
A) price level will be higher but real GDP will be unaffected. B) real GDP will be larger but the price level will be unaffected. C) the price level will be higher and real GDP will be larger. D) neither the price level nor real GDP will be unaffected.
Marginal revenue is the change in:
a. total revenue resulting from a one unit change in output. b. total revenue resulting from a change in marginal cost. c. price resulting from a one unit change in output. d. none of these.
A monopolist that practices perfect price discrimination
a. creates no deadweight loss. b. charges one group of buyers a higher price than another group, such as offering a student discount. c. charges a higher price but produces the same monopoly level of output as when a single price is charged. d. charges some customers a price below marginal cost because costs are covered by the high-priced buyers.
The calculation of GDP does not account for the following:
a. Value of goods and services b. ?? c. ?? d. Value of the investment e. Both b and c