If the supply of health care services is highly inelastic, programs that subsidize the cost of purchasing medical services will
A) lead to higher prices for medical services.
B) lead to lower prices for medical services.
C) not affect the price of medical services.
D) help the buyers of medical services more than the sellers of those services.

Question

Quizplus · Accepted Answer

When the supply of health care services is highly inelastic, an increase in demand due to subsidies will primarily lead to higher prices, as the quantity supplied cannot easily increase.

If the Supply of Health Care Services Is Highly Inelastic