Question

Suppose we allocate a budget for flu shots between physicians and licensed physician assistants. Let MBP equal the marginal benefit from physician administering flu shot and MCP equal the marginal cost of physician administering flu shot. Let MBA equal the marginal benefit from physician assistant administering flu shot and MCA equal the marginal cost of physician assistant administering flu shot. If MBP/MCP > MBA/MCA, we can conclude that

a. too many flu shots are being given by physicians.

b. too many flu shots are being given by assistants.

c. too many flu shots are being given by physicians relative to assistants.

d. too many flu shots are being given by assistants relative to physicians.

e. the current combination of physicians and assistants is the optimal allocation

Please note: MBP/MCP > MBA/MCA

Answer 1