Question

Many medical and hospital services in Canada are provided at zero prices to Canadians and are financed out of general government revenues.

1.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

Yes, it is true that many Medical and Hospital services in Canada provided at zero prices to Canadians it means all the Medical Services and medical facilities to the Canadians are completely free of cost and there is no limit to take the advantage up to which level, therefore it is the prime responsibility of the government to provide 0 Medical Services charges to the Canadians.

And all the medical expenses in Canada financed by the general government revenues it means, it is the government revenue expenditure to provide all types of medical facilities to Canadians.

The marginal value of such services consumed by each Canadian if the government provided the necessary resources to satisfy all demand is very high because marginal revenue is the additional value which incurred when any individual is going to take the facilities.

The government maintains the zero price on Medical Services but restricts the supply to less than the quantity demanded than in the market the supply curve shows the condition of deficit supply and on the demand side, it is excess demand so ultimately it reduces the Welfare Medical Services point of view in the country.