Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 7, Problem 8CQ
To determine
Whether the low cost medical insurance leads to too much consumption of medical services.
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Most systems of medical insurance substantially lower the out-of-pocket costs consumers have to pay for additional units of physician services and hospitalization. Some reduce these costs to zero. How does this method of payment affect the consumption levels of medical services?Might this method of organization result in “too much” consumption of medical services?
Using the appropriate graphs and terminology, explain why a city with 30,000 people is likely to have one hospital but 70 housecleaning service companies.
The fact that most medical care purchases are financed through insurance:
a. has no effect on health care consumption because aggregate costs are the same regardless of payment method.
b. reduces the amount of health care consumed by raising the price of additional units of care.
c.has decreased health care costs and therefore reduced aggregate health care expenditures.
d. increases the amount of health care consumed by reducing the price of additional units of care.
Chapter 7 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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