Consider how health insurance affects the quantity of health care services performed. Suppose that the typical medical procedure has a cost of $100, yet a person with health insurance pays only $20 out of pocket. Her insurance company pays the remaining $80. (The insurance company recoups the $80 through premiums, but the premium a person pays does not depend on how many procedures that person chooses to undergo.) Consider the following demand curve in the market for medical care. Use the black point (plus symbol) to indicate the quantity of procedures demanded if each procedure has a price of $100. Then use the grey point (star symbol) to indicate the quantity of procedures demanded if each procedure has a price of $20. 200 180 Q, at P-$100 180 140 Q, at P=$20 120 100 80 80 40 20 Demand O. 10 20 30 40 50 80 70 80 90 100 Quantity of Medical Procedures Price of Medical Procedures

Consider how health insurance affects the quantity of health care services performed. Suppose that the typical medical procedure has a cost of $100, yet a person with health insurance pays only $20 out of pocket. Her insurance company pays the remaining $80. (The insurance company recoups the $80 through premiums, but the premium a person pays does not depend on how many procedures that person chooses to undergo.) Consider the following demand curve in the market for medical care. Use the black point (plus symbol) to indicate the quantity of procedures demanded if each procedure has a price of $100. Then use the grey point (star symbol) to indicate the quantity of procedures demanded if each procedure has a price of $20. 200 180 Q, at P-$100 180 140 Q, at P=$20 120 100 80 80 40 20 Demand O. 10 20 30 40 50 80 70 80 90 100 Quantity of Medical Procedures Price of Medical Procedures

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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