A State Government decides to reduce spending on education and cut its financial support to nursing...

Question

A State Government decides to reduce spending on education and cut its financial support to nursing colleges. Therefore, 8 over 25 colleges that train nurses are shut down. Discuss its impact using supply and demand curves on the following markets. You need to select one graph with your discussion for each question.

How will the demand or supply curve change in the markets for nursing schooling? How will it affect the changes in equilibrium tuition (Price) and number of nursing students (Quantity)? (10%)

From a, how the demand or supply curve change in the labor markets for nurses? How will it affect the changes in equilibrium wage (Price) and number of nurses (Quantity)? (10%)

From b, how the demand or supply curve change in the markets for health services? How will it affect the changes in equilibrium charge amount (Price) and number of services (Quantity)? (10%)

The following graphs is a demand curve and a supply curve for the market of flu shot service. However, this equilibrium is done without the consideration of externalities at either demand side or supply side. We assume this equilibrium is done by a private marginal benefit (demand) curve and a private marginal cost (supply) curve.

The consumers purchase this service without considering “herd protection”, which means the protection of the unvaccinated population in addition to consumers themselves. Discuss the type of externality existing for this case. Indicate a positive or negative externality at demand or supply side. (10%)

Where should be a social demand curve located in the graph? Choose a graph from the study material. (10%)

Suppose tax and subsidy are the two only strategies a government can do. What is your suggestion for government intervention? Tax or Subsidize the consumers or producers? Answer this question based on the previous result. (10%)

The following graph shows the market supply and demand curve for portable ultrasound machine in the United States. Assume this is a perfectly competitive market.

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Robert · Accepted Answer

Healthcare Economics
1. As the State Government decides to reduce spending on education and cut its financial support 
to nursing colleges. Therefore, 8 over 25 colleges that train nurses are shut down. This will 
affect the demand and supply in different markets as follows:
a) In the markets for nursing schooling 
As the number of nursing colleges reduce, the market supply of nursing schools will go 
down. It will be shown as a leftward and upward shift of the supply curve. As the demand 
is the same, a reduction in supply will put pressure on the existing nursing schools. 
Demand remaining the same, a fall in supply will cause equilibrium tuition (Price) P to 
rise from P to P’ and number of nursing students (Quantity) to fall from Q to Q’ as the 
price rises.
b) In the labor markets for nurses 
As the number of nursing colleges reduce, the market supply of labor (nurses) will go 
down. It will be shown as a leftward and upward shift of the supply curve for labor 
(nurses). As the demand is the same, a reduction in supply will put pressure on the 
existing labor force of nurses. Demand remaining the same,

A State Government decides to reduce spending on education and cut its financial support to nursing colleges. Therefore, 8 over 25 colleges that train nurses are shut down. Discuss its impact using...

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