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    Difference of Means

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    Economics of Health Administration

    Question 2:

    If the demand and supply curves for wheel chairs in the United States is given as follows:

    Where QD and QS are the quantities of wheat demanded and supplies, respectively, and P is the price of wheel chairs in US$. What is the price and quantity equilibrium for wheel chairs sold?
    For equilibrium price and quantity, equate the demand and supply equations, thus we have

    P=12.4-4*2.5 = $2.4

    What policy recommendations would you make if the actual price of wheel chairs were below the equilibrium price?

    If the actual price of wheel chair is below the equilibrium price, it means that there is more demand for wheel chairs and there will be less supply in the market, leading to shortage in the market. Wheel chairs are usually used by people who met with an accident or are in their old age (people who need help), therefore to tackle this problem Govt. should announce subsidy on the wheel chairs. The wheelchair users get partial money from Govt. to purchase the wheel chair. The manufacturer will get more price per unit and increase the supply bringing the ...

    Solution Summary

    Difference of means are examined in the solution.