Homework Lance
ADM Topic 2 DQ 2
Markets and government both allocate scarce resources. Please explain how government adjusts market outcomes though subsidies and whether Pareto efficiencies are achieved. Discuss the role of subsidies in the Affordable Care Act as explained in the assigned article “How Millionaires Get Obamacare Subsidies Intended to Aid the Poor” by Managan.
The government can adjust the market by using subsidies as a tool to allocate the resources to major party of population. The governments give subsidies to the business in order to keep the prices in check to a low level so that these resources become reachable for the lower income people as well as the higher income people. The Pareto efficiencies are not achieved or are tough to be achieved as there is no prices lower enough to make the resources available to a person who has no money.
The subsidies are very important component of the Affordable Care Act. The government has give subsidies to the healthcare providers which make the cost of healthcare low for the low income people or even free from extremely low income people. In the US 85 or 8.7 million customers out of 10.2 million enrollees of the Obamacare are receiving tax credits which help them reduce their monthly payments of health premium.
References:
Watkins, Thayer.(2015) “The Impact of an Excise Tax or Subsidy on Price”. San José State University Department of Economics. Retrieved 2016-11-22
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