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Question 7 What would happen in the market for laser eye surgery if insurance companies started...

Question 7

What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures? What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures? Provide a graphical representation to your answer in question 7. The graph can either be hand-drawn or copied from the textbook or other online sources.

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Answer #1

Laser eye surgery do have some substitutes like contact lens and lens exchange. So, when insurance companies start to cover a portion of the price of voluntary procedures, the overall cost of the laser eye surgery decreases. Hence, when cost decreases, the demand for the same will expand because of the inverse relationship between the cost and the demand of any product or service.   In the graph, P1 and Q1 are the initial price and quantity respectively. P2 and Q2 are tbe new price and quantity respectively. Here cost and price are assumed to be same. So when , price decreases from P1 to P2, then the quantity demand increases from Q1 to Q2.

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