In an effort to reduce the federal budget deficit,Congress has decided to reduce the amount of money spent on Medicare and Medicaid.How does this affect the equilibrium price and quantity of medical services?

Question

Quizplus · Accepted Answer

In this scenario, a reduction in funding for Medicare and Medicaid will reduce the demand for medical services as fewer people will have access to these programs. As a result, the equilibrium price and quantity of medical services will both fall. The decrease in demand will put downward pressure on the price, while the reduction in funding will likely lead to a decrease in the supply of medical services, further contributing to the fall in equilibrium quantity.

In an Effort to Reduce the Federal Budget Deficit,Congress Has