Economics Problem: Chapter 15
An individual’s demand for physician office visits per year is Q = 10 – (1/20)P, where P is the price of an office visit. The marginal cost of producing an office visit is $120.
- If individuals pay full price for obtaining medical services, how many office visits will they make per year?
- If individuals must pay only a $20 copayment for each office visit, how many office visits will they make per year?
- What is the deadweight loss to society associated with not charging individuals for the full cost of their health care
Given that subsidized health care leads to increased health care usage, is this necessarily due to moral hazard? Explain.