-Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. The perceived price on the part of consumers is
A)Ps.
B)P₀.
C)Pd.
D)undetermined without more information.

Question

-Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. The perceived price on the part of consumers is
A)Ps. 
B)P₀. 
C)Pd. 
D)undetermined without more information.

Quizplus · Accepted Answer

The perceived price on the part of consumers is Pd because subsidies reduce the out-of-pocket cost for consumers, making them perceive the price as lower than the actual price Ps.

-Refer to the Above Figure