Assume that candle wax is traded in a perfectly competitive market in which the demand curve captures buyers’ full willingness to pay while the supply curve reflects all production costs. For each of the following situations, indicate whether the total output should be increased, decreased, or kept the same in order to achieve allocative and productive efficiency.
a. Maximum willingness to pay exceeds minimum acceptable price:
b. MC > MB:
c. Total surplus is at a maximum:
d. The current quantity produced exceeds the market equilibrium quantity:
Answer:
A. Increased
B. Decreased
C. Kept the same
D. Decreased
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Economists who support market-based reforms for health care believe that increased competition among providers of health care would
A) increase costs but increase economic efficiency. B) increase costs and decrease economic efficiency. C) decrease costs and increase economic efficiency. D) decrease costs but decrease economic efficiency.
Lower deductibles for employer-provided health care will tend to shift the ________ curve for medical services to the ________
A) supply; right B) demand; right C) supply; left D) demand; left