Asked by Jonathan Ghansiam on Jun 18, 2024
Verified
Suppose that the average cost of a doctor visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor visit,there will be:
A) an excess supply of doctor visits.
B) an excess demand for doctor visits.
C) an increase in the equilibrium number of doctor visits.
D) no change in the number of doctor visits.
Price Ceiling
A legally imposed maximum price on goods or services, intended to protect consumers from high costs.
Doctor Visit
A scheduled appointment with a medical professional for the evaluation, diagnosis, or treatment of a health condition.
Excess Demand
Occurs when the quantity demanded of a good or service exceeds the quantity supplied at a given price, often leading to upward pressure on prices.
- Determine the likely outcomes of implementing price controls on both producers and consumers.
Verified Answer
KO
Kyje' O'LoughlinJun 19, 2024
Final Answer :
B
Explanation :
A price ceiling of $50 is below the average cost of a doctor visit, which means that doctors will not be willing or able to supply as many visits at that price. However, patients will want to purchase more visits at the lower price. This creates excess demand, as there are more patients who want to visit the doctor than there are available visits at the capped price.
Learning Objectives
- Determine the likely outcomes of implementing price controls on both producers and consumers.