Market Microeconomics

Running head: MARKET MICROECONOMICS
Market microeconomics
Name of the student
Name of the university
Author note

1MARKET MICROECONOMICS
Table of contents
Answer 1)...................................................................................................................................2
Answer 2)...................................................................................................................................3
Reference list..............................................................................................................................5

2MARKET MICROECONOMICS
Answer 1)
According to the health report produced by the Australian government health report it
has shown that tooth decay mong children and among the low-income earners has increased
at a rate of 10% since the year 2000 (Cowell 2018). Therefore it is recommended that the
government should be subsidising the dental care for the low income earners and also for the
children. Subsiding the dental care will lead to reduction in the tooth decay problems for the
children as well as for the low income earners.
Figure 1 Effect of subsidy
When the government will be providing subsidies for the dental care, the children of
the low-income earners will be able to spend more on the dental care which will help them to
take care of their teeth and prevent tooth decay. From the above diagram it can be seen that
after the subsidy the supply curve shifts downward and therefore the amount of quantity
bought by the consumers will increase (Baumol and Blinder 2015). The initial price was P3