Problem: Maximum Price on Dental Care Visits
Assume that the government decides to impose a maximum price for each visit to the dentist with the goal of increasing access to dental care. "Access to health care" is typically ' defined in terms of both the price of health care and the quantity of health care received (access to health care is-said to improve if the price of health care declines and the quantity i of health care received rises). For ease of analysis, assume that individuals do not have dental insurance and dental costs are paid out-of-pocket.
1. Using thqdefinition of access to health care from the introduction to this question, would this policy increase access to dental care? Explain in words and graphically.
2. Do you think the supply curve for visits to the dentist is relatively price inelastic or relatively price elastic? Why?
3. Would this policy be more successful with a relatively price inelastic or relatively price elastic supply curve? Explain in words and graphically.