As governor, you have decided that anyone who works but earns less than $20,000 a year will have their health insurance premiums paid for by the government. How does this affect the equilibrium price and quantity of medical services?

Question

Quizplus · Accepted Answer

When the government pays health insurance premiums for low-income workers, it effectively increases their ability to pay for medical services, leading to an increase in demand. With supply remaining constant, this results in a higher equilibrium price and quantity for medical services.

As Governor, You Have Decided That Anyone Who Works but Earns