Suppose that the demand curve for health care of Mr Ralph is given by the equation p= 10025Q, where P is the price of a visit to a doctor and Q is the number of doctor visits per year under a private medical system. a) What is the efficient number of visits per year and what is Ralph's total medical cost for the year? Suppose that the government introduces medical insurance. There is no deductible, but there is a coinsurance at a rate of 50%. That is the government pays 50% of the cost of a visit to the doctor. b) How many visits to the doctor will occur under this government medical insurance program? How much will it cost the government per year? What is the total cost per year of his total visits to the doctor per year? c) Compare your answers to questions a) and b) The following question is independent from the previous questions. d) Is it not inefficient that the government of Canada offers free universal health care and financed out of its total tax revenue? Should it have offered medical insurance only to low income people instead? Suppose that the demand curve for health care of Mr Ralph is given by the equation p= 10025Q, where P is the price of a visit to a doctor and Q is the number of doctor visits per year under a private medical system. a) What is the efficient number of visits per year and what is Ralph's total medical cost for the year? Suppose that the government introduces medical insurance. There is no deductible, but there is a coinsurance at a rate of 50%. That is the government pays 50% of the cost of a visit to the doctor. b) How many visits to the doctor will occur under this government medical insurance program? How much will it cost the government per year? What is the total cost per year of his total visits to the doctor per year? c) Compare your answers to questions a) and b) The following question is independent from the previous questions. d) Is it not inefficient that the government of Canada offers free universal health care and financed out of its total tax revenue? Should it have offered medical insurance only to low income people instead
