Government payment of a per-unit subsidy for medical care causes

Question

Quizplus · Accepted Answer

Government payment of a per-unit subsidy for medical care reduces the cost of medical care for consumers, leading to an increase in the quantity of medical care demanded. This is represented by a shift in the demand curve to the right. The price that providers receive for each unit of care may remain the same or increase slightly due to the increase in demand, but the subsidy compensates for any reduction in price. There is no direct effect on the market supply curve or the market demand curve.

Government Payment of a Per-Unit Subsidy for Medical Care Causes