Question

Please answer the following questions and explain each answer. Thank you so much for your help.

Question 9 1 pts Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check- up, the local government mandates that the price of a check-up cannot be more than $40. Is this a price floor or a price ceiling? This example describes neither a price floor nor a price ceiling, since it is set below the equilibrium price. This example describes a price ceiling There is not enough information given to answer the question This example describes a price floor Question 10 1 pts Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check- up, the local government mandates that the price of a check-up cannot be more than $40. What happens to the number of check-ups in this market, relative to the market equilibrium? The quantity of check-ups would decrease. The quantity of check-ups would increase. The quantity of check-ups would initially increase, then decrease over time. The quantity of check-ups would remain unchanged. There is not enough information given to answer the question

Answer 1

aup suppo medical to gee price of check suppose maskel equilibrium price for a basic. al check-up is $50. To encourage more people yee a check-up, the local govt. mandales the it of a check-up can't be more than $40. a This is a PM price celling. $50 $40 ton 11 5 This example descabe a price celling because Price celling refers that condition when Gout. imposes a price which are below the equilibrium level of price. Gouto take this decision because govt. sant to that every consumer can buy or take services so gout. set-up prices below the Equailibrium price ZA ve price celling. Qelo Aug Due to Govt. mandates the price of a check-up can't be more than $40 quantity of checkup would initially increase then decrease over time (6) The quantity of check-ups would initially increase, then decrease over time. The reason behind this is that when gout. set-up price below the equilibrium price PAPEL

due to this excess demand condition occur for the Merke- te means Demand more than) supp 14 due to this price in the marked for check-up increases and as a result quantity demand of check up reduce over time and this process is known as chain effects". price a $ 50 $40. - - - Excess Demme TELEELLLLLLLLLLLL 10:14 Aup U - pfeen See - S consumers 1 Producer Surau oply O At initial price $50 consumer surplus is the area (ABC) producer surplus is the area (Bo. and

lathen Govt. mandate the price of check-ups can't be more than $10 then consumer surplus and producer surplus are. *50 $ 400 lb Producer Surplus (6) consumer surplus would definitely increase producer surplus would definitely decrease w Because before price celling consumer surplus is ar(ABC) but after price celling consumer surples is ar(ADB'C) which is ar(ABC) yar (ABC) Similarly for producer surdos Before picecelling= producer surplus is ar(BOC) and after ar(obc) which is ar (Boc) ar(Bloc) so offer price celling producer surplus decine

09:13 DIA up Pic eight loss. LLO $50 $40 DIR Posc Social lalelfare a produrer surplust Consumerptus surplus. According to this social Welfare = atbtc Dead taleight loss = dte. Social lalel fare may have increased or decreased. Consumer surplus is greater than producer surplus ar consemer surplus is greater but produce as Surplus is much less. The social welfare depend on the amount of dead weight loss. If beard laleight loss Higher they VINURI ddddddd