PF), where nc is the number of patients per day who are at least 40 years old, and pf is the price of a checkup. The market demand for the number of dental checkups per day, Qr, is Qr = 100(150 - pr)/3, where p¡ represents the price of a dental checkup. The long-run market supply of medical checkups is QF = 50pF - 10pr. The long-run market supply of dentists is Qr = 50pt - 10pr. The supplies are linked because people decide on a medical and dental career based in part on relative earnings. a) If nc = 40,000, what is the equilibrium number of medical and dental checkups? What are the equilibrium prices? How would an increase in nc affect the equilibrium prices? Determine dpr /dnc and dpr /dnc. b) Suppose that, instead of determining the price of medical checkups by a market process, large health insurance companies set their reimbursement rates, effectively determining all medical prices. A medical doctor receives $35 per checkup from an insurance company, and a patient pays only $10. How many checkups do doctors offer collectively? What is the equilibrium quantity and price of dental checkups?
PF), where nc is the number of patients per day who are at least 40 years old, and pf is the price of a checkup. The market demand for the number of dental checkups per day, Qr, is Qr = 100(150 - pr)/3, where p¡ represents the price of a dental checkup. The long-run market supply of medical checkups is QF = 50pF - 10pr. The long-run market supply of dentists is Qr = 50pt - 10pr. The supplies are linked because people decide on a medical and dental career based in part on relative earnings. a) If nc = 40,000, what is the equilibrium number of medical and dental checkups? What are the equilibrium prices? How would an increase in nc affect the equilibrium prices? Determine dpr /dnc and dpr /dnc. b) Suppose that, instead of determining the price of medical checkups by a market process, large health insurance companies set their reimbursement rates, effectively determining all medical prices. A medical doctor receives $35 per checkup from an insurance company, and a patient pays only $10. How many checkups do doctors offer collectively? What is the equilibrium quantity and price of dental checkups?
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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Transcribed Image Text:The market demand for medical checkups per day is QF = 25(198 + nc /20,000 -
Pr), where nc is the number of patients per day who are at least 40 years old, and pf is the price
of a checkup. The market demand for the number of dental checkups per day, Qr, is Qr =
100(150 - pr)/3, where p¡ represents the price of a dental checkup. The long-run market supply
of medical checkups is QF = 50pF - 10pr. The long-run market supply of dentists is Qr = 50pT
- 10pr. The supplies are linked because people decide on a medical and dental career based in
part on relative earnings.
a) If nc = 40,000, what is the equilibrium number of medical and dental checkups? What
are the equilibrium prices? How would an increase in nc affect the equilibrium prices?
Determine dpf /dnc and dpr /dnc.
b) Suppose that, instead of determining the price of medical checkups by a market process,
large health insurance companies set their reimbursement rates, effectively determining
all medical prices. A medical doctor receives $35 per checkup from an insurance
company, and a patient pays only $10. How many checkups do doctors offer
collectively? What is the equilibrium quantity and price of dental checkups?
c) What is the effect of a shift from a competitive medical checkup market to insurance-
company-dictated medical-doctor payments on the equilibrium salaries of dentists?
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