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10. Suppose that the United States and the European Union impose a
price ceiling on crude oil of $25 per barrel. Explain, and illustrate
graphically, how this would affect the markets for crude oil and for
gasoline in the United States and in the European Union.
11. Given that rent controls can actually hurt low-income people, devise a
housing strategy that would provide affordable housing for those
whose incomes fall below the poverty line (in 2004, this was about
$19,000 for a family of four).
12. Using the model of demand and supply, show and explain how an
increase in the share individuals must pay directly for medical care
affects the quantity they consume. Explain how this would address
the total amount of spending on health care.
13. Given that people pay premiums for their health insurance, how can
we say that insurance lowers the prices people pay for health-care
services?
14. Suppose that physicians now charge $30 for an office visit and
insurance policies require patients to pay 33 1/3% of the amount they
pay the physicians, so the out-of-pocket cost to consumers is $10 per
visit. In an effort to control costs, the government imposes a price
ceiling of $27 per office visit. Using a demand and supply model, show
how this policy would affect the market for health care.
15. Do you think the U.S. health-care system requires reform? Why or
why not? If you think reform is in order, explain the approach to
reform you advocate.

NUMERICAL PROBLEMS
Problems 1–4 are based on the following demand and supply
schedules for corn (all quantities are in millions of bushels per year).
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org

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