The Table Below Shows the Market for Private Long-Term-Care Beds

question 51

Essay

The table below shows the market for private long-term-care beds in two countries, Gothum and Camdon, which have identical demands but different supplies. $\begin{array}{cccc}\hline \begin{array}{c}\\\text { Monthly } \\\text { Fee }\end{array} & \begin{array}{c}\text { Quantity Demanded } \\\text { in Both Countries }\end{array} & \begin{array}{c}\text { Quantity Supplied }\end{array} & \text { Quantity Supplied } \\&&\text { Gothum } & \text { Camdon } \\\hline \$ 1000 & & 180 & 150 \\1100 & 240 & 190 & 170 \\1200 & 230 & 200 & 190 \\1300 & 220 & 210 & 210 \\1400 & 210 & 220 & 230 \\1500 & 200 & 230 & 250 \\1600 & 190 & 240 & 270 \\\hline\end{array}$
a) What are the present equilibrium fee and number of available beds in each country?
b) If demand were to decrease by 60 in each country, what would be the new equilibrium fee and quantity in each country?
c) What explains the different effects in the two counties?
d) From the initial situation in a), suppose that the government in each country wished to increase the quantity of beds available by 20. How much subsidy to residents would be needed in each country?

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Definitions:

Stable Marriage

A marital relationship characterized by enduring commitment and satisfaction between partners.

Apprehension

a feeling of anxiety or fear that something bad or unpleasant is going to happen.

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Enduring characteristics and behaviors that define an individual's patterns of thought, feelings, and actions.

Factor-analytic Research

A statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved variables called factors.