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After a Natural Disaster Destroyed One of the 10 Hospitals

Question 57

Multiple Choice

After a natural disaster destroyed one of the 10 hospitals in a city and injured nearly 75 percent of the population,what would you expect to happen to the price and quantity of medical services,ceteris paribus?


A) There would be no expected changes to equilibrium price or quantity.
B) Equilibrium price would rise because supply would slightly decrease and demand would dramatically increase.The effect on equilibrium quantity is ambiguous.
C) Equilibrium price would fall because supply would slightly decrease and demand would dramatically increase.The effect on equilibrium quantity is ambiguous.
D) Equilibrium price would rise and quantity would unambiguously fall because supply would slightly decrease and demand would dramatically increase.
E) Equilibrium price would fall and quantity would unambiguously rise because demand would decrease and supply would remain constant.

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