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Question
The federal government has recently decided to expand the amount of prescription drug insurance offered to the elderly. How does this affect the price and quantity of medical services?
a. Equilibrium price and quantity are not affected.
b. Equilibrium price and quantity have risen because supply and demand have decreased.
c. Equilibrium price and quantity have risen as demand has increased, but supply has remained constant.
d. Equilibrium price and quantity have fallen because demand has decreased and supply has remained constant.
e. Equilibrium price has fallen and quantity has risen because demand has decreased and supply has remained constant.
Answer
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