Suppose that the average cost of a doctor visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor visit,there will be:
A)an excess supply of doctor visits.
B)an excess demand for doctor visits.
C)an increase in the equilibrium number of doctor visits.
D)no change in the number of doctor visits.

Question

Quizplus · Accepted Answer

A price ceiling of $50 is below the average cost of a doctor visit, which means that doctors will not be willing or able to supply as many visits at that price. However, patients will want to purchase more visits at the lower price. This creates excess demand, as there are more patients who want to visit the doctor than there are available visits at the capped price.

Suppose That the Average Cost of a Doctor Visit Is