The Table Gives Supply and Demand Data for a Certain

question 276

Multiple Choice

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

• A)efficiency because, at 7,000 units, the marginal cost to society of $3,000 equals the marginal benefit of $3,000.
• B)efficiency because, at 12,000 units, the marginal cost to society is $4,000 and the marginal benefit is $1,000.
• C)inefficiency because, at 12,000 units, the marginal cost to society is $5,000 and the marginal benefit is $2,000.
• D)inefficiency because, at 12,000 units, the marginal cost to society is $2,000 and the marginal benefit is $5,000.

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Definitions:

Tuition

The fee for instruction at a school, university, or college.

Room And Board

The combined cost of housing (room) and food/meals (board) typically for students living on a college campus.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen, a fundamental concept in economics.

Real Cost

The total cost of manufacturing or providing a service, including all direct and indirect costs.