Question

Suppose that the market demand for physical therapies is given by the equation P=100-Q. The cost...

Suppose that the market demand for physical therapies is given by the equation P=100-Q. The cost of each therapy is 40.

a. What is the socially optimal number of physical therapies?

b. Suppose that the price of physical therapies is 40. Suppose further that patients have insurance that pays for 50% of the price of physical therapies. How many physical therapies will be purchased? What is the amount of deadweight loss from insurance moral hazard?

c. How would your analysis of deadweight loss change if the service in question was open heart surgery?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that the market demand for physical therapies is given by the equation P=100-Q. The cost...
Suppose that the market demand for physical therapies is given by the equation P=100-Q. The cost of each therapy is 40. a. What is the socially optimal number of physical therapies? (2 points) b. Suppose that the price of physical therapies is 40. Suppose further that patients have insurance that pays for 50% of the price of physical therapies. How many physical therapies will be purchased? What is the amount of deadweight loss from insurance moral hazard? (4 points) c....
   Health Care Demand An individual's demand for physician office visits in a given year is...
   Health Care Demand An individual's demand for physician office visits in a given year is given by, Q = 10 - 0.04P, where Q is the number of office visits and P is the out-of-pocket price paid by the individual for each visit. Assume the market price of an office visit is $180. Use this information to answer the questions below. QUESTIONS: 1. Without insurance, how many office visits will the individual make in one year? NOTE: round to...
A monopoly faces the following inverse demand function: p(q)=100-2q, the marginal cost is $10 per unit....
A monopoly faces the following inverse demand function: p(q)=100-2q, the marginal cost is $10 per unit. What is the profit maximizing level of output, q* What is the profit maximizing price what is the socially optimal price What is the socially optimal level of output? What is the deadweight loss due to monopoly's profit maximizing price?
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q....
Suppose that the demand equation: P = 6 – Q and supply equation: P = Q. a. Calculate the price elasticity of demand at equilibrium. b. Calculate the equilibrium price and quantity, and consumer surplus and producer surplus. c. Suppose government imposes a unit tax of $1 on producers. Derive the new supply curve and also calculate the new equilibrium price and quantity. d. Calculate tax revenue and the deadweight loss of this tax.
Suppose the demand for the good is P = 10 - Q. A monopolist's total cost...
Suppose the demand for the good is P = 10 - Q. A monopolist's total cost is TC = 2 + 4Q. What's the optimal price and quantity of the monopolist? calculate the deadweight loss from the monopoly.
Given information, cost equation C(Q), Marginal cost MC(Q), and its demand for elasticity equation Q(p). ?(?)...
Given information, cost equation C(Q), Marginal cost MC(Q), and its demand for elasticity equation Q(p). ?(?) = 0.5?3 − 20?2 + 282.5? MC(?) = 1.5?2– 40? + 282.50 ?d(?) = 16 − (1/20)? The government decides that the lack of competition in this market is detrimental to the economy and, for that reason, government intervention is required. The governor proposes regulating the price of electricity or nationalizing the power plant. Do you think the governor is right? [Hint: Is there...
1. Consider a market with inverse demand P (Q) = 100 Q. A monopolist with linear...
1. Consider a market with inverse demand P (Q) = 100 Q. A monopolist with linear cost C(Q) = 20Q serves this market. (a) Find the monopolistís optimal price and quantity. (b) Find the price, quantity, proÖt, consumer surplus, and social welfare under perfect competition. (c) Find the optimal proÖt, consumer surplus, social welfare and the deadweight loss for monopoly. (d) What is the % loss in social welfare as we move from perfect competition to monopoly.
9.21) Suppose the domestic demand equation for a widget is given by Q = 80 –...
9.21) Suppose the domestic demand equation for a widget is given by Q = 80 – 2P and the domestic supply equation is Q = -10 + P. a) Assume there is free trade and the world price of the widget is 20 liras. How many units of this widget will be imported? b) Calculate the change in the consumer supply and producer supply if the government applies a 5 liras per unit tariff on the product. What will be...
The market demand for primary care visits is given by the inverse demand curve ? =...
The market demand for primary care visits is given by the inverse demand curve ? = 400 – 8? and the inverse market supply is ?? = 40 + 4?. Graph the market supply and demand and indicate the market equilibrium values for price and quantity. Suppose that the consumers in this market are then provided health insurance that pays for all services after consumers pay a 40% coinsurance rate for every visit. On the same graph, graph the demand...
Suppose a doctor’s visit actually costs $75. Bob has demand for doctor’s visits given by the...
Suppose a doctor’s visit actually costs $75. Bob has demand for doctor’s visits given by the following equation where ?? _is the quantity demanded and P is the price of a doctor’s visit: Qd = 20-.1P a. Draw Bob’s demand curve b. How many times will Bob go to the doctor (i.e. what is his quantity demanded) if he has no insurance and must pay full price? c. How many times will Bob go to the doctor with full insurance...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT