What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery, and fewer doctors decide to enter the field of joint replacement surgery?
A) Demand will decrease, but this will not shift the supply curve.
B) Supply will decrease, but this will not shift the demand curve.
C) Demand and supply will both decrease.
D) Demand will decrease and supply will increase.
Answer: C
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Price floors, when applied to agricultural markets, have
a. promoted the interests of consumers b. reflected the government's desire for greater equality in the distribution of goods among consumers c. created the need to print ration coupons d. created excess supply, which meant that the government would have to buy the excess supply to keep the prices from falling below the price floor e. created excess demand, which meant that the government had to prevent the price floor from rising above the equilibrium price
Which of the following is LEAST likely to be an outcome of a cartel as compared to the situation before the cartel was formed?
A) Cartel members charge higher prices. B) Cartel members reduce production. C) Cartel members make fewer profits. D) Cartel members do not compete with each other in pricing decisions.