(individual) Figure 5-6 portrays a supply curve of physicians' services and a demand curve for thos services. The market-clearing fee is $30.00.
- To what position will the demand curve shift if the government arees to pay the entire fee charged by physicians? What will consequently happen to the market-clearing price? (Hint: What quantity will people demand at a zero price?)
6 million will be demanded.
- What will happen to the demand curve and to the market-clearing price if the government commits itself to pay one-half of physicians' fees? (Hint: When the fee charged is $30, what is the fee paid by consumers? What quantity will they want to purchase at this price?)
4 million will be demanded, and the market-clearing fee will be $40, though consumers will only pay $20 of that.
- What will be the market-clearing price if the government pays 80 percent of the fee charged by physicians?
5 million will be demanded, and the market-clearing fee will be $50, of which $10 will be paid by the consumer.
