-In the above figure, the total dollar amount of the Medicare subsidies provided by the government is equal to
A) the difference between Ps and P0 multiplied by QM.
B) the difference between Ps and Pd multiplied by QM.
C) the difference between P0 and Pd multiplied by Qd.
D) the difference between Ps and Pd multiplied by Q0.

Question

-In the above figure, the total dollar amount of the Medicare subsidies provided by the government is equal to
A) the difference between Ps and P0 multiplied by QM. 
B) the difference between Ps and Pd multiplied by QM. 
C) the difference between P0 and Pd multiplied by Qd. 
D) the difference between Ps and Pd multiplied by Q0.

Quizplus · Accepted Answer

The total dollar amount of the Medicare subsidies provided by the government is calculated by finding the difference in price per unit subsidized (between the supplier's price Ps and the demand price Pd) and then multiplying that by the quantity of Medicare services provided (QM). This is because the subsidy covers the gap between what suppliers charge and what consumers (or in this case, Medicare) pay for a given quantity of services.

-In the Above Figure, the Total Dollar Amount of the Medicare