Question

Many medical and hospital services in Canada are provided at zero prices to Canadians and are financed out of general government revenues. What would be the marginal value of such services consumed by each Canadian if the government provided the necessary resources to satisfy all demand? Suppose the government maintains the zero price on medical services but restricts the supply to less than the quantity demanded. What is likely to happen in this market?

Answer 1

Answer :

The marginal value (or maginal cost) of such government paid medical services to a Canadian citizen is essentially zero, if all the demands are met by the government.

For a situation where, government of Canada keeps up the zero price level on medical services, however limits quantity supplied with the end goal that it is not exactly the quantity demanded, it would prompt an inefficiency. The market will essentially observe a consumer demand/supply disappointment, where countless people would be left with no decision yet to pass up benefiting healthcare. It will most certainly be an instance of service on first-come-first-serve premise, which will appear to be unfair to a lot of citizens.

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