Health Economics and Policy
7th Edition
ISBN: 9781337106757
Author: James W. Henderson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 5QAP
To determine
The economic aspects of
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill.
a) what happens to the amount of market exchange ? b) explain the impact of the price ceiling on efficiency
c) who bears the cost of the regulation?
What would happen if, in order to provide lower cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Please answer questions a, b, and c below.)
What is the effect of this maximum price legislation on the market for health insurance?
Briefly explain the situation for both consumers and producers (i.e. health care providers).
What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?
The local government has decided that because children's health has large external benefits, it will offer a subsidy to help families pay
for visits to the pediatrician. However, the government isn't sure at what level to set the subsidy. The figure below shows the current
demand curve for pediatrician visits (MBprivate) and three alternative subsidies, represented by curves Dsubsidy = $30, Dsubsidy =
$60, and Dsubsidy = $90.
Price
$240
$220
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
0
5000 150
200
(200, 210) S=MCpvt-MC social
250
300
350
400
Quantity of pediatrician visits
450
D
subsidy=$90
D
subsidy=$60
Dsubsidy=$30
MB
private
500
Tools
DWL90
DWL 30
a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is:
b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90.
Instructions: Use the tools provided 'DWL30' and 'DWL90' to illustrate the deadweight loss for each subsidy. Drag the…
Chapter 13 Solutions
Health Economics and Policy
Knowledge Booster
Similar questions
- The local government has decided that because children's health has large external benefits, it will offer a subsidy to help families pay for visits to the pediatrician. However, the government isn't sure at what level to set the subsidy. The figure below shows the current demand curve for pediatrician visits (MBprivate) and three alternative subsidies, represented by curves Dsubsidy = $30. Dsubsidy = $60. and Dsubsidy = $90 Price $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 0 100 50 S-MC Quantity of pediatrician visits Cial Dubsidy-510 Dobity-360 Dudy-130 private MB 450 500 Tools A. DWL 30 DWL0 a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is. visits b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90. Instructions: Use the tools provided "DWL 30' and 'DWL 90' to illustrate the deadweight loss for each subsidy Drag the points to move or resize.arrow_forwardOver the last decade prices in the US for insulin has more than tripled E, and is more than ten times the average price in other countries. More than 37 million people in the US have diabetes and many rely on the biologic medication to stay alive. Patients with private insurance generally don't pay the full list price as drug companies negotiate discounts with insurers to win their business, and patients usually pay part of the price as a co-pay or deductible. However, the uninsured (who usually have lower incomes) and even some with insurance can end up paying several thousand dollars per year for their medication. These high prices have led many patients to make life-or-death decisions over whether to buy their insulin or pay their other bills. In order to combat these high prices, the US House of Representatives recently passed a bill to cap insulin prices at $35 for a one-month supply. However, as part of President Biden's "Build Back Better" plan, it is unlikely to pass in the…arrow_forwardFor each of the cases below, describe the type of entry barrier that appears to be most relevant. Which of the following describes the type of entry barrier faced for a patented blood pressure medication? A. There is a natural entry barrier for a patented blood pressure medication because entry into the market has been limited through government action. B. There is a created entry barrier for a patented blood pressure medication because entry into the market has been limited through limited access to key natural resources. C. There is a created entry barrier for a patented blood pressure medication because entry into the market has been limited through government action. D. There is a natural entry barrier for a patented blood pressure medication because entry into the market has been limited through price cutting.arrow_forward
- What would happen if, in order to provide lower-cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Answer questions a, b, and below) a. What is the effect of this maximum price legislation on the market for health insurance? b. Briefly explain the situation for both consumers snd producers (i.e health care providers) c. What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?arrow_forwardIn his testimony before the house ways and means health subcommittee, Robert Reischauer stated that Congressional budget office research concluded that price controls could severely limit the quality and quantity of medical care in the United States. He also argued that the only way to control medical care spending is by imposing global healthcare budgets at the national level. Explain how price controls can be bad and global budgets good.arrow_forward3rd party payments often cause the cost of health care to go down does third party payments to cover medical costs bring the price of medical services up?arrow_forward
- The graph below represents a simplified hypothetical version of the market for medical procedures in Canada. If the market is allowed to set the price and quantity of procedures, what price and quantity will it set? P = $7,000, Q = 62 thousand P = $12,000, Q = 106 thousand P = $7,000, Q = 112 thousand P = $49,000, Q = 62 thousandarrow_forwardEconomics Explain how an “individual mandate," where every resident of a country is required by law to purchase health insurance might affect the cost of healthcare. Which specific source of market failure is addressed by such a mandate? Explain your answer.arrow_forwardhelp please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forward
- A medical reported that the consumption of this product has many health benefits Describe how does this would affect the market for the product.arrow_forwardWhat would likely be the impact on health care costs if a government implements price controls on pharmaceuticals? A. Health care costs would increase due to higher administrative overhead. B. Health care costs would decrease as drug prices are directly reduced. C. Health care costs would remain unchanged, as other expenses would rise to offset drug cost savings. D. Health care costs would initially decrease but eventually lead to shortages and higher costs in the long term.arrow_forwardThe local government has decided that because children's health has large external benefits, it will offer a subsidy to help families pay for visits to the pediatrician. However, the government isn't sure at what level to set the subsidy. The figure below shows the current demand curve for pediatricians' visits (D1), and three alternative subsidies, represented by curves D2, D3 and D4. a. Assume that the correct level of subsidy is D3. Compared to the efficient outcome, graph the loss in total surplus that would result from subsidies D2 and D4. b. The socially optimal level of pediatrician visits is __ visits.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning