Use the Following to Answer Questions

question 32

Multiple Choice

Use the following to answer questions .
Exhibit: The Market for Health Care
-(Exhibit: The Market for Health Care) Based on the exhibit and assuming that there are no third-party payers:

• A) the total amount spent on health services is OP₁AQ₁ at price P₁.
• B) the equilibrium price and quantity are P₃ and Q₂.
• C) at price P₂ there would be a surplus.
• D) A and B are true.

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Definitions:

Labor Demand

The total amount of workers that employers want to hire at a given wage rate and time.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded at those prices, typically downward sloping.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to a change in its price.

Substitutes Availability

The presence of alternative products or services that consumers can turn to when the price of a good increases or its quality decreases.