-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

When Medicare subsidies are introduced, they typically cover a portion of the total cost of medical services, reducing the amount that consumers have to pay out of pocket. Therefore, the perceived price by consumers would be lower than the actual price paid to providers (Ps). In this context, Pd represents the reduced price perceived by consumers due to the subsidy, making it the correct answer.

-Refer to the Above Figure