Question

When the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but only by 25%. What is the effect on the price of health-care services over time?a. it decreases because demand increased more than supplyb. it decreases because demand increased by less than supplyc. it increases because demand increased by less than supplyd. it increases because demand increased by more than supply

Answer 1

Answer:

The correct answer is option d.

Explanation:

When the baby boomer generation retires, the demand for health care increases by 30%. This will cause the demand curve to shift to the right increasing price. As a result, the number of health service providers will increase. But the increase in demand is greater than the increase in the supply of health services.  

This will cause the price of health services to increase.