The government provides national dental insurance benefits for all U.S. citizens that cover 100% of the cost of all dental services. There are two effects of this policy. First, there will be an increase in the number of consumers of dental services. Second, there will be fewer dentists willing to provide dental services, resulting in some dentists removing themselves from the market entirely.

· Graph the initial equilibrium

Note: You do not need to change the numbers on each axis, but you do need to label each axis and each curve.

· Answer the following questions.

o Determine whether demand or supply changes, or both.

o Determine whether the change is an increase or a decrease.

o Show the change in demand and/or supply on the graph of the initial equilibrium. (You will have one graph for each event.)

o Identify the result on the equilibrium price and quantity of dental services.