Question

Suppose that the market for doctor visits can be characterized by the following supply and demand equations:

Q = 300 - P
Q = 2P

10.10.  

Problem Set #5 - Part II - 10.10 (J)

What is the deadweight loss in the market for doctor visits if every consumer is insured?

		A.  $0
		B.  $400
		C.  $800
		D.  $2,400
		E.  $1,200

Answer 1

First of all insurance rate is not described, so exactly we can't calculate if there is a deadweight lost exit in the market for doctor visits.

But actually if consumers are insured by any health insurance, demand for doctor visits will not decrease, rather it may increase. Also, the insurance will not affect the fee doctors are getting and what patients are paying for every visit to the doctor. Thus we can conclude that even if patients ( consumers ) are insured there will be no deadweight loss in doctor visits market by patients.

Hence correct option is (A) i.e 0 deadweight loss.