This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: out of pocket? How much does the insurance company pay? E. Does insurance lead to an efficient consumption of medical services? Briefly explain. F. Show the area of deadweight loss and determine its dollar value. Answers: A. Set P=MC; Q=20 units; P=$150. B. Total expenditures will be $3,000. C. Set .30P=MC; Q=62 units; P=MC of firm=$150 but Price paid by patient is $45 D. Total expenditure is $9300; insurance pays $6510; patient pays $2790; E. Insurance leads to overconsumption (MB at 62 units is $45 but the MC is $150) creating a deadweight loss. F. Area is triangle between two quantities, above demand and is valued at $2205....
View Full
Document
 Spring '10
 Jannett

Click to edit the document details