Question
Suppose the equilibrium price for an average hospital stay in the absence of insurance is $10,000. At that price, 1000 people are hospitalized each year.
Suppose the equilibrium price for an average hospital stay in the absence of insurance is $10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers a policy to lower the out of pocket price of a stay to $100, and at that price, 1200 people are hospitalized.
How much TOTAL (not per person)health insurance premium revenue must the insurer collect to finance this arrangement?
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Managerial Economics and Business Strategy
Authors: Michael Baye, Jeff Prince
9th edition
9781259896422, 1259290611, 1259896420, 978-1259290619
