Government Payment of a Per-Unit Subsidy for Health Care Services

question 342

Multiple Choice

Government payment of a per-unit subsidy for health care services causes the out-of-pocket price that consumers pay for care to be

• A) less than the price that health care providers receive for providing care.
• B) greater than the price that health care providers receive for providing care.
• C) greater than the market clearing price without the subsidy.
• D) equal to zero.

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Definitions:

Factor of Production

An input used in the production of goods or services, such as land, labor, capital, and entrepreneurship.

Earnings

Earnings refer to the amount of money that an individual or business makes before any deductions are taken.

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The total desire or willingness to purchase meals and services offered by restaurants at various price points.

Profit-maximizing

The process or strategy of adjusting production and prices to achieve the highest possible profit.