Question

Which of the following would contribute to the high price of health care? Choose one or...

Which of the following would contribute to the high price of health care? Choose one or more:

A. Supply of health care is limited.

B. Many people use Medicare and Medicaid.

C. Demand for health care is relatively elastic.

D. There are many providers of health care in the industry.

E. Demand for emergency care is relatively inelastic.

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Answer #1

High prices of health care can be due to the limited supply of health care. Where there are fewer suppliers than actual demand, there is always a gap between demand and supply and suppliers have the incentive to sell at a higher price. Also, the demand for emergency being relatively inelastic as people are not much concerned about the prices.

Note that all other options rather supports the lower prices hypothesis for healthcare.

Thus, Option A and E are correct answers.

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