Which of the following best describes economic surplus in the context of healthcare markets?

• A. The sum of consumer surplus and producer surplus generated by healthcare transactions.
• B. The total amount of government spending on healthcare services.
• C. The number of healthcare jobs created in a given year.
• D. The difference between healthcare costs and insurance premiums.

Answer: (A)

Verified step by step guidance

1. Understand the concept of economic surplus: Economic surplus is the total net benefit to society from the production and consumption of goods or services. It is typically measured as the sum of consumer surplus and producer surplus.
2. Define consumer surplus: Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. It represents the benefit consumers receive from purchasing at a lower price.
3. Define producer surplus: Producer surplus is the difference between the price producers receive for a good or service and the minimum amount they are willing to accept to produce it. It represents the benefit producers receive from selling at a higher price.
4. Apply these definitions to healthcare markets: In healthcare, economic surplus would be the combined benefits to both patients (consumers) and healthcare providers (producers) from healthcare transactions.
5. Evaluate the answer choices: The correct description of economic surplus in healthcare is the sum of consumer surplus and producer surplus generated by healthcare transactions, as it captures the total net benefit to society.