The Table Shows the Hypothetical Demand and Supply Schedule for Health

question 31

Multiple Choice

The table shows the hypothetical demand and supply schedule for health care.With insurance paying two-thirds of the cost of health care, there would be a resulting allocative

• A)efficiency because, at 500 units, the marginal cost to society of $400 equals the marginal benefit of $400.
• B)efficiency because, at 700 units, the marginal cost to society is $200 and the marginal benefit is $600.
• C)inefficiency because, at 700 units, the marginal cost to society is $600 and the marginal benefit is $200.
• D)inefficiency because, at 700 units, the marginal cost to society is $400 and the marginal benefit is $200.

---

Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Antimacassars

Small pieces of cloth or paper placed over the backs or arms of chairs or sofas to protect them from grease or dirt.

Monopolistic Distributor

A sole provider of a product or service in a particular market, facing little to no competition.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers, usually downward sloping.