EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 11PA
Subpart (a):
To determine
The
Subpart (b):
To determine
The demand and supply of medical care.
Subpart (c):
To determine
The demand and supply of medical care.
Subpart (d):
To determine
The demand and supply of medical care.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Draw the demand curve in the market for medical care and upload your picture of your diagram, the horizontal axis should represent the number of medical procedures.)
Show the quantity of procedures demanded if each procedure has a price of $100.
On your diagram, show the quantity of procedures demanded if consumers pay only $20 per procedure. If the cost of each procedure to society is truly $100, and if individuals have health insurance as described above, will the number of procedures performed maximize total surplus? Explain.
Consider how health insurance affects the quantity of healthcare 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 undertake.)
Ralph will consume any health care service just as long as its MB exceeds the money he must pay out of pocket. His insurance policy has a zero deductible and a 10 percent copay, so Ralph only has to pay 10 percent of the price charged for any medical procedure. Which of the following procedures will Ralph choose to consume?
a. An $800 eye exam that has an MB of $100 to Ralph.
b. A $90 hearing test that has an MB of $5 to Ralph.
c. A $35,000 knee surgery that has an MB of $3,000 to Ralph.
d. A $10,000 baldness treatment that has an MB of $16,000 to Ralph.
1.
An article in the Economist observes: "Insurance companies often suspect
the only people who buy insurance are the ones most likely to collect."
What do economists call the problem that is described in the article? If insurance
companies are correct in their suspicion, what are the consequences for the market for
insurance? Use health insurance as an example.
Chapter 7 Solutions
EBK ESSENTIALS OF ECONOMICS
Ch. 7.1 - Prob. 1QQCh. 7.2 - Prob. 2QQCh. 7.3 - Prob. 3QQCh. 7 - Prob. 1QRCh. 7 - Prob. 2QRCh. 7 - Prob. 3QRCh. 7 - Prob. 4QRCh. 7 - Prob. 5QRCh. 7 - Prob. 1QCMCCh. 7 - Prob. 2QCMC
Ch. 7 - Prob. 3QCMCCh. 7 - Prob. 4QCMCCh. 7 - Prob. 5QCMCCh. 7 - Prob. 6QCMCCh. 7 - Prob. 1PACh. 7 - Prob. 2PACh. 7 - Prob. 3PACh. 7 - Prob. 4PACh. 7 - Prob. 5PACh. 7 - Prob. 6PACh. 7 - Prob. 7PACh. 7 - Prob. 8PACh. 7 - Prob. 9PACh. 7 - A friend of yours is considering two cell phone...Ch. 7 - Prob. 11PA
Knowledge Booster
Similar questions
- Consider the following information on Alfred’s demand for visits per year to his health clinic, if his health insurance does not cover (100 percent coinsurance) clinic visits. Price Quantity 5 9 10 9 15 9 20 8 25 7 30 6 35 5 40 4 a. Alfred has been paying $25 per visit. How many visits does he make per year? Find his demand curve. b. What happens to his demand curve if the insurance company institutes a 40 percent coinsurance feature (Alfred pays 40 percent of the price of each visit)? What is his new equilibrium quantity? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardA website offers a place for people to buy and sell emeralds, but information about emeralds can be quite imperfect. The website then enacts a rule that all sellers in the market must pay for two independent examinations of their emerald, which are available to the customer for inspection. a. How would you expect this improved information to affect demand for emeralds on this website? b. How would you expect this improved information to affect the quantity of high-quality emeralds sold on the website?arrow_forwardPage 11 of 11 1707 words KX Zix Accessibility: Investigate 10. Cost Shifting The following figure represents a hospital facing both private and Medicare patients. Please use the graph to answer the following questions. Hospital Payment ($) 0 B Patients (Hospital Admissions) A. If Medicare decides to cut the DRG price, what will be the effect on the number of private and Medicare patients served by the hospital. Please draw the new demand curves and label the new number of patients in the graph above and discuss the effect briefly. B. What is the concept of cost-shifting? What does the above analysis tell you about cost-shifting? Display Settings Focus + 1009arrow_forward
- Draw a market where consumers demand health insurance and insurance companies supply insurance at a price of insurance called the premium. Explain why, in this model of the insurance market, the individual mandate (the mandate is everyone has to have insurance) will cause health insurance premiums to increase.arrow_forwardBelow is an example of supply and demand for healthcare services in the U.S. (Third-Party Payer Market) 1) In the U.S. patients pay an average of 20% of total healthcare expenditures. Using the table below, if patient's pay an average copay is $647 per visit, what would be the average total cost per visit? At that price, what quantity will be exchanged in this market? What is the total amount spent on Healthcare? (Remember, this is a Third-Party Payer Market) 2) Healthcare costs continue to rise faster than GDP, taking up an increasing share of total U.S. expenditures. What is one way that we might reduce total healthcare expenditures? Use the values on the table (estimates are totally fine) to illustrate how your proposal would reduce the total cost of healthcare. Feel free to attach an image of a graph to help explain your point. Average Total cost per visit (Insurance Cost plus Co-Pay) Demand for office visits Supply of office visits (Millions/yr) (Millions/yr)arrow_forwardEconomists in Champaign have been studying the local market for pizza. The market is described in the graph: Market for Pizza 12 11.3 10.8 10 9.7 9. 8.7 7.9 8.1 6.35 5.9 4.4 4.2 3 2.2 2.3 1.6 0.6 446 479 500 526 549 568 602 637 Quantity Some research by the local university shows that eating pizza improves health in several ways. The local government decides to subsidize pizza consumption by paying $2 of every pizza sold(essentially a negative tax of $2). How much will the government spend with the subsidy? Pricearrow_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? (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)?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_forwardWhat is the relationship between health and health economics?arrow_forward
- Suppose that the graph below illustrates the demand for healthcare services given a coinsurance plan of 25%, what would be the expected change if the participant changed jobs and received a plan with 100% coinsurance?arrow_forward2. In the following graph, suppose market is in equilibrium at point A. Determine if you agree or disagree with the statements. a. Suppose there is an increasing in demand for health care services but no changes in supply, then the new equilibrium will be at point C. b. From equilibrium point A, if there exist an increase in supply of the doctors in the area, the new equilibrium would be at point B. c. From equilibrium point A, if there is an induced demand from the increased number of doctors in the area, the new equilibrium would be at point C. d. If the demand curve is D', one can not say that there is an induced demand with the increase of physicians in the area. Q₂ Q₁ Quantity of Services Delivered Price per Unit Outputarrow_forwardWhat 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_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning