In the United States, to receive a medical license, a doctor must complete a residency program at a hospital. Hospitals are not free to expand their residency programs in a particular medical specialty without approval from a Residency Review Committee (RRC), which is made up of physicians in that specialty. A hospital that does not abide by the rulings of the RRC runs the risk of losing its accreditation from the Accreditation Council for Graduate Medical Education (ACGME). The ACGME and the RRCs argue that this system makes it possible to ensure that residency programs do not expand to the point where they are not providing residents with high-quality training.

a. How does this system help protect consumers?

b. How might this system protect the financial interests of doctors more than the well-being of consumers?

c. Briefly discuss whether you consider this system to be a good one. Is your conclusion an example of normative economics or of positive economics? Briefly explain.