Chapter 7, Problem 11PA

Subpart (a):

To determine

To draw:The demand curve for medical care by showing the procedure required if each procedure has a price of $100.

Subpart (b):

To determine

The quantity of procedure required if consumers are ready to pay $20 per procedure. Also, to find whether the number of procedures performed will maximize the overall surplus, if the optimal rate for each procedure is truly $100, and individuals have health insurance.

Subpart (c):

To determine

Whether the usage of care are considered to be excessive when the economists blame the health insurance system for these usage of medical care.

Subpart (d):

To determine

The policies that can prevent the excessive usage of medical care.