The Table Gives Supply and Demand Data for a Certain

question 174

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:

Substitutes

Products that serve similar purposes. An increase in the price of one will cause an increase in demand for the other (examples are hamburgers and tacos, butter and margarine, Chevrolets and Fords).

Cable TV

is a system of delivering television programming to consumers via radio frequency signals transmitted through coaxial cables.

Satellite TV

A television system that delivers programming to viewers by broadcasting from a communications satellite orbiting the Earth directly to the viewer's location.

Stock Market

This term refers to the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses, including securities listed on public stock exchanges.