Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $1 co-pay is established? $$\begin{array} { | c | c | c | }
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 1,200 & 0 \
\hline \$ 1 & 600 & 150 \
\hline \$ 2 & 300 & 300 \
\hline \$ 3 & 0 & 450 \
\hline \$ 4 & 0 & 600 \
\hline \$ 5 & 0 & 750 \
\hline \$ 6 & 0 & 900 \
\hline \$ 7 & 0 & 1,050 \
\hline
\end{array}$$
A)$0
B)$600
C)$1,800
D)$2,400

Question

Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $1 co-pay is established? $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 1,200 & 0 \
\hline \$ 1 & 600 & 150 \
\hline \$ 2 & 300 & 300 \
\hline \$ 3 & 0 & 450 \
\hline \$ 4 & 0 & 600 \
\hline \$ 5 & 0 & 750 \
\hline \$ 6 & 0 & 900 \
\hline \$ 7 & 0 & 1,050 \
\hline
\end{array}$$
A)$0
B)$600
C)$1,800
D)$2,400

Quizplus · Accepted Answer

The cost to the third-party payer at a $1 co-pay is calculated by multiplying the quantity demanded at that price by the difference between the supply price and the co-pay. At a $1 co-pay, the quantity demanded is 600. The supply price that matches this demand is $2 (where quantity supplied equals quantity demanded). Thus, the cost is 600 * ($2 - $1) = $600 for the co-pay plus 600 * $1 = $600 for the difference between the supply price and the co-pay, totaling $1,200. However, this calculation overlooks the fact that the third-party payer also covers the co-pay amount, leading to a total cost of 600 * $2 = $1,200, not $600. The correct interpretation should consider the total amount paid by the third-party payer, which is the quantity demanded multiplied by the supply price, leading to a total cost of $1,200, not the options provided. This indicates a misunderstanding in the explanation process, as none of the options directly match this corrected calculation. Given the options and the typical approach to calculating third-party payer costs, the closest correct option based on standard calculations would be to consider the total expenditure, which seems to have been misinterpreted in the explanation. The correct calculation involves considering the total payment made by the third-party, which is not accurately reflected in the provided choices or explanation.

Refer to the Table Shown That Depicts a Third-Party Payer