Principles of Microeconomics, California Edition
2nd Edition
ISBN: 9780393622102
Author: Dirk Mateer, Lee Coppock
Publisher: NORTON
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Chapter 18, Problem 5SP
To determine
Impact of legalization on the price and quantity of Kidneys.
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Chapter 18 Solutions
Principles of Microeconomics, California Edition
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- Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.arrow_forwardWhich kind of externality problems exists in the market for medical checkup? How does this externality problem affect the efficiency of the market? Explain in detail.arrow_forwardWhat are the equilibrium price and quantity of medical checkup?arrow_forward
- What would happen if, in order to provide lower cost healthcare, the government decided to set a price ceiling (Pmax) in the health insurance market?arrow_forwardAssume that the government decides to subsidize the price of healthcare. The subsidy will be given directly to individual consumers of medical-related goods and services. Who is likely to benefit more from this subsidy: Providers (doctors, nurses, hospital staff, etc....) or Patients? Explain your answer using a supply and demand diagram.arrow_forwardDemand studies in health care have provided estimates of both income and price elasticity. Estimates of income elasticity are usually above +1.0. Estimates of price elasticity typically range between -0.1 and -.75 (with hospital services at the lower end and elective services at the upper end). What information do these estimates convey? What does the price elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions? What does the income elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?arrow_forward
- Explain how each of these situations will affect the quantity demanded of health insurance: a) A reduction in the tax-exempt fraction of health insurance premiums. b) An increase in buyer income. c) An increase in per capita medical expenses.arrow_forwardWhat would happen if, in order to provide lower cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Please answer questions a, b, and c below.) What is the effect of this maximum price legislation on the market for health insurance? Briefly explain the situation for both consumers and producers (i.e. health care providers). What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?arrow_forwardWhat would the impact of price ceilings have on the field of medicine in the United States.arrow_forward
- Discuss your views on the effect of price on the demand for urgent or non-urgent medical care. Justify how access to care may be related to the value of good health.arrow_forwardWhat would be the effects on price and quantity if physicians can induce demand?arrow_forwardWhy does taking a drug off a formulary increase the prices to the consumer?arrow_forward
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