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Suppose that an individual's demand for the number of physician visits per year, Q, can be represented by the following equation: Q = 50-0.4 P, where P, the market price of an office visit, equals physician's constant marginal cost of $110. Determine the efficient number of office visits If the individual has no insurance.

Now assume the individual purchases full insurance coverage and the demand for (but not quantity demanded of) physician care remains unchanged. 

A)How many times would this fully insured person visit the physician?

B) Calculate the welfare loss (DWL) associated with this insurance coverage.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91058612

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