Question
In Town A, the true Marginal Benefit of a medical procedure (MB*) to patients is represented by the following equation: MB*=100-2Q The patient's marginal benefit
In Town A, the true Marginal Benefit of a medical procedure (MB*) to patients is represented by the following equation:
MB*=100-2Q
The patient's marginal benefit in this example is a function of the number of procedures performed (Q).The physicians in Town A believe that the patient's Marginal Benefit of this medical procedure (MB1) is:
MB1=80-2Q.
The Marginal Cost (MC) of the Medical procedure is $20 per procedure.
i) What is the efficient number of procedures to be performed?
ii) How many procedures will be performed in Town A?
iii) Will this procedure be overutilized or underutilized?
iv) What is the deadweight loss from the inappropriate number of procedures being performed?
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Macroeconomics
Authors: Paul Krugman, Robin Wells
4th Edition
1464110379, 9781464110375
