Assume that health insurance is private in a country, and the market for insurance is competitive. The figure below shows the marginal benefit and willingness and ability to pay curve. Premium (thousands of dollars per year) $160 billion. $80 billion. $160 million. $80 million. 8 6 N 0 D=MB 10 20 40 50 30 Quantity (millions of families insured) Suppose that the marginal social benefit of insurance exceeds the willingness and ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of health insurance is a constant $8,000 a year. If the government decides to provide public health insurance, how much will taxpayers have to pay?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Assume that health insurance is private in a country, and the market for insurance is
competitive. The figure below shows the marginal benefit and willingness and ability
to pay curve.
Premium (thousands of dollars per year)
$160 billion.
$80 billion.
$160 million.
$80 million.
12
10
8
606
4
2
0
D = MB
10
20
30 40 50
Quantity (millions of families insured)
Suppose that the marginal social benefit of insurance exceeds the willingness and
ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of
health insurance is a constant $8,000 a year. If the government decides to provide
public health insurance, how much will taxpayers have to pay?
Transcribed Image Text:Assume that health insurance is private in a country, and the market for insurance is competitive. The figure below shows the marginal benefit and willingness and ability to pay curve. Premium (thousands of dollars per year) $160 billion. $80 billion. $160 million. $80 million. 12 10 8 606 4 2 0 D = MB 10 20 30 40 50 Quantity (millions of families insured) Suppose that the marginal social benefit of insurance exceeds the willingness and ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of health insurance is a constant $8,000 a year. If the government decides to provide public health insurance, how much will taxpayers have to pay?
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