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The Table Below Shows the Market for Private Long-Term-Care Beds

Question 135

Essay

The table below shows the market for private long-term-care beds in two countries, Gothum and Camdon, which have identical demands but different supplies.  Monthly  Fee  Quantity Demanded  in Both Countries  Quantity Supplied  Quantity Supplied  Gothum  Camdon $1000180150110024019017012002302001901300220210210140021022023015002002302501600190240270\begin{array}{cccc}\hline \begin{array}{c}\\\text { Monthly } \\\text { Fee }\end{array} & \begin{array}{c}\text { Quantity Demanded } \\\text { in Both Countries }\end{array} & \begin{array}{c}\text { Quantity Supplied }\end{array} & \text { Quantity Supplied } \\&&\text { Gothum } & \text { Camdon } \\\hline \$ 1000 & & 180 & 150 \\1100 & 240 & 190 & 170 \\1200 & 230 & 200 & 190 \\1300 & 220 & 210 & 210 \\1400 & 210 & 220 & 230 \\1500 & 200 & 230 & 250 \\1600 & 190 & 240 & 270 \\\hline\end{array}
a) What are the present equilibrium fee and number of available beds in each country?
b) If demand were to decrease by 60 in each country, what would be the new equilibrium fee and quantity in each country?
c) What explains the different effects in the two counties?
d) From the initial situation in a), suppose that the government in each country wished to increase the quantity of beds available by 20. How much subsidy to residents would be needed in each country?

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a) fee = $1,300; number of bed...

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