Read the following statement and answer each of the following questions.
Professor Uwe Reinhardt of Princeton University, writing in the New York Times on 31 August 2012, noted that the U.S. is headed toward a "major shortage of physicians." Assume this is true and that the market for physicians can be described by conventional demand and supply influences.
(a) On the demand side, what recent legislative and demographic developments likely have increased the demand for medical care by physicians?
(b) On the supply side, what prevents medical schools from increasing the sizes of their classes and producing lots more physicians in coming years? (Do a bit of Googling here; however, you could also look at the 2012 State of the RegionReport for help. Click on http://www.odu.edu/forecasting/state-region-reports/2012
(c) If there actually is a shortage, what will it likely do to the incomes of physicians?
(d) Assume that physicians and nurses are hired by hospitals. Explain the isoquants and isocosts how a shortage in physicians will affect the use of physicians.
(e) Since the federal government pays an increasingly large proportion of medical bills, what actions will the feds likely take if the shortage occurs and health prices and incomes rise rapidly?
(f) There is evidence that physicians are retiring quicker now because of the Medicare and Affordable Health Care regulations. Given higher income from those that stay and the greater demand does that surprise you? Why or why not?
