Suppose that the market demand for medical care is summarized by the demand function: and the market

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Suppose that the market demand for medical care is summarized by the demand function:image text in transcribed

and the market supply is summarized by the supply function:image text in transcribed

(a) Calculate the equilibrium quantity and price, assuming no health insurance is available.

(b) Suppose that health insurance is made available that provides for a 20 percent coinsurance rate. Calculate the new equilibrium price and quantity. (Hint: How does the demand curve shift?)

(c) Calculate the deadweight loss due to this insurance.

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The Economics Of Health And Health Care

ISBN: 9781138208049

8th Edition

Authors: Sherman Folland, Allen C. Goodman, Miron Stano

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