The total amount that the U.S. government spends to support a covered type of health care service under the Medicare system equals
A) the per-unit subsidy provided to producers of that service times the quantity of the service demanded by consumers at a below-equilibrium out-of-pocket price of the service.
B) the per-unit subsidy provided to producers of that service times the equilibrium quantity of the service demanded at the market clearing price that would arise in the absence of Medicare.
C) the below-equilibrium, out-of-pocket price that consumers pay for the service times the quantity of the service provided by producers at that out-of-pocket price.
D) the below-equilibrium, out-of-pocket price that consumers pay for the service times the quantity of the service demanded by consumers at that out-of-pocket price.

Question

Quizplus · Accepted Answer

The total amount spent by the U.S. government on a Medicare-covered health care service is calculated by multiplying the per-unit subsidy provided to producers by the quantity of the service demanded by consumers at a price lower than the market equilibrium, reflecting the government's intervention to make the service more affordable.

The Total Amount That the U