Step 1: Market for Doctor Visits The following graph shows the supply of and demand for doctor visits in a small economy. Assume that there are no externalities from the production or consumption of doctor visits The supply curve shows the number of doctor visits supplied at each price, where the price per visit is the amount received by doctors for their services. That is, the supply curve represents the marginal cost of producing additional doctor visits. The demand curve shows the number of doctor visits demanded by patients at each price, where the price per visit is the amount that patients have to pay themselves. That Is, the demand curve represents the marginal benefit of consuming additional doctor visits. Use the graph Input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool (? Market for Doctor Visits 180 Doctor Visits per Year 200 Supply Patient Payment 120 Price Doctors 150 (Dollars per visit) Charge (Dollars per visit) 120 Insurance Payment (Dollars per visit) DOLLARS PER VISIT Demand 100 200 300 400 500 600 DOCTOR VISITS PER YEAR The equilibrium number of doctor visits In this economy is - visits per year, while the equilibrium price is per visit. Now, suppose everyone in this economy gets health insurance that pays 80% of the price received by doctors. In this case, there would be doctor visits demanded per year. (Hint: Type each entry in the drop-down menu into the white box, and examine the result. When you change the number of doctor visits in the white box, the value in the Insurance payment box changes to reflect the amount that would make up the difference between what patients are willing to pay and what doctors charge at a given quantity. ) Step 2: Market for X-Rays The following graph shows the supply of and demand for x-rays in the economy. Adjust the following graph to show the effect of the introduction of the health insurance plan on the market of x-rays. Tool tip: Click and drag one or both of the curves. Curves will snap Into position, so If you try to move the curve and It snaps back to Its original position, just try again and drag it a little farther. (?) Market for X-Rays O Supply Demand Supply PRICE OF X-RAYS Demand QUANTITY OF X-RAYS Which of the following is a consequence of the Introduction of the health Insurance plan? Check all that apply. The total medical costs In the economy decrease. The equilibrium price of x-rays rises, other things held constant. The equilibrium quantity of x-rays rises, other things held constant. The demand for doctor visits Increases