Question

In an effort to create a healthcare safety net, the government requires employers to provide healthcare coverage to all employees. What impact will this increased coverage have on the demand for doctors in the short run?

a. It will increase the demand.
b. It will decrease the demand.
c. It will not affect the demand.

Answer 1

a. It will increase the demand.

Step-by-step explanation:

In the short-run, the increased healthcare coverage will increase the demand for doctors. However, in the long-run the demand will stabilize relatively. Then, it will the increased coverage of healthcare required from employers will no longer affect the demand for the services of doctors. Demand in the short-run is always increasing until an equilibrium is reached where the market forces of demand and supply become equal.