The state of California

1. The state of California recently considered passing a tax on the services of doctors in that state

in order to raise revenue to pay for universal health coverage for California residents. Suppose
the average open heart surgery costs $100,000, and at that price 23,339 surgeries are performed
each year. Fully explain what the most likely outcome would be in this market if a tax on
surgeries is implemented. Use a graph if it will help.