Question

Second: Multiple Choice Questions, Please choose the Correct answer: (10 points) 1. If elasticity of demand of health care services equal - 1, we recommend the health care firm to: A. Increase the price of health care services. B. Decrease the price of health care services. C. Make the price of health care services constant. D. All of the above are wrong. 2. In the monopolistic competition market of health care services: A. There are many sellers B. Individual firm's market share is small. C. There are non barriers to entry D. All of the above are true. 3. At the prices over the equilibrium price of healthcare service there was a A. Shortage in the supply of healthcare resources. B. Surplus in the supply of healthcare resources. C. Shortage in the demand of healthcare resources. D. All of the above are wrong. 4. Demand on healthcare services in Jeddah city equal: A. population needs to healthcare services in .Jeddah city B. population wants to healthcare services in .Jeddah city C. population needs to healthcare services and there purchasing power in Jeddah city. D. All of the above are wrong.

Answer 1

1)The elasticity=-1 ,is unitary elasticity which tells demand is in shape of rectangular hyperbole .at every point of this curve the multiplication of respective p and q is same ,means total revenue will be same.

So to increase Profit , health care service should increase price because Increase in price will not effect total revenue but Increase in price will decrease quantity demanded and lower quantity means lower cost ,so profit will increase.

Option A is correct

2)In monopolistic competition ,there are many firms but number of firm in monopolistic competition is lower than perfect competition.

As their name suggest'competition' means there is no barries to entry and exits. And as perfect competition ,due to high number of firms ,each individual firm get a very small share to entire Market.

So option D is correct

3)AT equilibrium the quantity demanded and Quantity supplied is equal.

Above equilibrium price ,means we increase price from equilibrium price, so according to law of demand , Increase in price Decreases quantitydl demanded .and according to law of supply , Increase in price increases QUANTITY supplied.

So the supply Increases and demand Decrease ,so supply become larger than demand ,so there is excess supply or surplus of supply.

Option B is right.

4) Demand is the QUANTITY of a good that CONSUMERs are willing and capable to buy at different prices.

So there must be willingness to buy and capability to buy or income.

So option C is right.