Question 1

Suppose that the demand for medical services can be characterized by the equation X = 500 - P/3.Suppose further that the supply of health services can be characterized by the equation X = P - 100.
(a)What is the equilibrium quantity and price in the market for health services?
(b)In an effort to make health services more affordable,the government restricts the price of health services to be no greater than $250.What will happen to the quantity of health services in the market?

Accepted Answer

The answer of Suppose that the demand for medical services...

Question 2

Suppose that the quantity demanded of visits to a doctor per year is given by X = 12 - 0.05P,where X is the number of visits and P is the price the patient pays for a visit.
(a)How many visits would the patient make if he or she had to pay the full price of a visit,$100?
(b)How many visits would a patient make if he or she was insured and had to pay only a 15% co-insurance payment per visit?
(c)How many visits would the patient make if medical services were free?

Accepted Answer

The answer of Suppose that the quantity demanded of visits...

Question 3

We have read that the uninsured and the insured behave differently in regard to medical services.Suppose that the insured have a demand curve that can be written as Q = 100 - P,where Q is the quantity of medical services and P is the price.Suppose further that the uninsured have a demand curve that can be written as Q = 100 - 2P.
(a)At a price of $10 of medical services,how much will each demand?
(b)At a quantity of 50 units,how much will the price be for the insured and uninsured?

Accepted Answer

The answer of We have read that the uninsured and...

Question 4

In Table 9.2 below,Emily will lose no income if she becomes sick.

Accepted Answer

The answer of In Table 9.2 below,Emily will lose no...

Question 5

We have read in this chapter that people with insurance may be more likely to engage in risky behavior because they are insured.Does it make sense then that there should be an "insurance tax" on people that engage in these types of activities?

Accepted Answer

The answer of We have read in this chapter that...

Question 6

A co-payment and coinsurance are the same thing.

Accepted Answer

A co-payment and coinsurance are not the same thing. A co-payment is a fixed fee that a patient pays for a specific medical service, while coinsurance is a percentage of the cost of the service that the patient pays.

Question 7

President Obama has suggested some form or universal health coverage for all Americans.How do you feel about this?

Accepted Answer

The answer of President Obama has suggested some form or...

Question 8

Suppose that the demand for medical services can be characterized by the equation P = 100 - Q.Suppose further that the supply of health services can be characterized by the equation P = Q + 50.
(a)What is the equilibrium quantity and price in the market for health services?
(b)In an effort to make health services more affordable,the government restricts the price of health services to be no greater than $65.What will happen to the quantity of health services in the market?

Accepted Answer

The answer of Suppose that the demand for medical services...

Question 9

One reason for the recent increases in health care costs is the aging of the American population.

Accepted Answer

The aging of the American population has led to an increase in demand for health care services, which has contributed to the recent increases in health care costs. As the population ages, there are more individuals living with multiple chronic conditions who require ongoing care and treatment. Additionally, older adults often require more expensive medical services and treatments, such as surgeries and hospitalizations.

Question 10

Suppose there are two drivers,Jermaine and Janet.Jermaine is not a very safe driver.In fact,there is a 7.5% chance that he will have an accident within the next year.Janet is a relatively safe driver.Her chances of having an accident in the next year are only 1%.If Jermaine is involved in an accident,he will cost the insurance company $1,000,000.If Janet is involved in an accident,she will only cost the company $500,000.What is the expected pay-out that the company can expect from insuring these two?

Accepted Answer

The answer of Suppose there are two drivers,Jermaine and Janet.Jermaine...

Question 11

Suppose that the demand curve D_m for medical services can be characterized by the equation M = 2000 - P,where M is the amount of medical services received per year and P is the price.Suppose further that P₀ is constant at 800. (a)Find the equilibrium quantity of services at P₀. (b)Find the equilibrium quantity of services when there is only a co-payment of 20% required such that the price is 0.2P₀. (c)How much additional expenditures induced by insurance are created?

Accepted Answer

The answer of Suppose that the demand curve D_m for...

Question 12

Since nearly a third of all people between the ages of 18 and 24 are uninsured,does it make sense to impose a surcharge for medical services to this cohort?

Accepted Answer

The answer of Since nearly a third of all people...

Quiz 9: The Health Care Market