Figure 8.E7Demand(if insured)Price (S)DemandSupply(no insurance)1009030100 120Quantity of Care (visits)In Figure 8.E7, the insurance leads tototal health care expenditures from,toOA. increased; $8,000; $12,000O B. decreased; $12,000; $9,000OC. increased; $90; $100O D. increased; $9,000; $12,000

Answered: Demand (if insured) Price ($) Demand…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Figure 8.E7
Demand
(if insured)
Price (S)
Demand
Supply
(no insurance)
100
90
30
100 120
Quantity of Care (visits)
In Figure 8.E7, the insurance leads to
total health care expenditures from,
to
OA. increased; $8,000; $12,000
O B. decreased; $12,000; $9,000
OC. increased; $90; $100
O D. increased; $9,000; $12,000

Expert Solution

Step 1

Here looking the graph, it can be seen the equilibrium without the insurance is at the intersection of the demand and supply curve at equilibrium quantity of care as 100 with price as $90.

With being insured, the equilibrium shifted from the previous point because of the shift in the demand curve which changes the equilibrium point of the quantity of care as 120 and price being $100

Step 2

It can be seen that because of the insurance, the total health care expenditures have been increased from $9000 of the initial equilibrium as $$ 90 \times 100 = $ 9000$ to $12000 of the new equilibrium as $$ 120 \times 100 = $ 12000$ .

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions