Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Each individual faces a 10% chance of contracting muscular back pain. Assume that back pain can only be treated by aggressive physical therapy. Physical therapists will provide as many visits as demanded for $120 per visit.

(a) Once an individual is diagnosed with the problem, his demand curve for back pain treatment (physical therapy session) is represented by the following formula:
Q = 40 - ¼ * P

where P is the price of an office visit and Q is the quantity of office visits
demanded. Draw the demand and supply curves for back pain treatment. Clearly
label your axis. What is the equilibrium quantity and price of physical therapy visits? How much will he/she spend on treatment for back pain?

(b) Now assume that individuals can buy an insurance policy at the beginning of the year before they know whether they will have muscular back pain. The insurer will pay for physical therapy sessions (without copayments or deductibles) for people who are diagnosed with the problem. How many physical therapy visits will the insured people have when they have back pain? How much will the insurance company have to pay for each person with back pain?

(c) What is the dead weight loss associated with full health insurance? Show it on your graph in part (a).

(d) Assume economy of risk-averse individuals with demand functions similar to the one described in part

(a). Will insurance, which provides full coverage, arise in this market? describe your answer (if yes, then quote the actuarially fair premium; if not, describe why not)

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M939647

Have any Question? 


Related Questions in Microeconomics

Economics and quantitative analysis assignmenttopic -

ECONOMICS AND QUANTITATIVE ANALYSIS ASSIGNMENT TOPIC - REGRESSION ANALYSIS Instructions - Background One of the biggest challenges in the higher education sector has been the recent growth of online universities. The Onl ...

Assignmentthere is the widespread notion that economists

Assignment There is the widespread notion that economists rarely agree with each other. This seems perplexing when we note also that economics is often called the "Queen of the Social Sciences" (meaning that it is the mo ...

Assignmentthe agile approach towards system analysis and

Assignment The agile approach towards system analysis and development emphasizes iterative and incremental development, in which requirements and solutions evolve through collaboration. Prepare a 1000 word essay on the r ...

Question 1 a scatter diagram is useful to determine if a

Question 1. A scatter diagram is useful to determine if a relationship exists between two variables. True False Question 2. Consider the following gasoline data: Quarter 1, Year 1, Year 2 1, 150, 156 2, 140, 148 3, 185, ...

Assignment multiyear plans and Assignment: Multiyear Plans and Analysis Preparation •

Assignment: Multiyear Plans and Analysis Preparation • Review the document titled "City of Charlottesville 2010 Annual Comprehensive Plan" located in the course shell. Write a three to four (3-4) page paper in which you: ...

Problem -the table below gives the income of each of four

Problem - The Table below gives the income of each of four individuals who are in a region. Calculate and plot the Lorenz curve and calculate the Gini coefficient for this economy. individual income 1 100 2 200 3 300 4 4 ...

Assignmentlinking questions 51 which one of the generic

Assignment Linking questions 5: 1. Which one of the generic competitive strategies best characterize your company's strategic approach to competing successfully? 2. Which athletic footwear companies in your industry appe ...

Economics problemsconsumer demand analysis and estimation

Economics Problems Consumer Demand Analysis and Estimation Applied Problems Please complete the following two applied problems: Problem 1: Patricia is researching venues for a restaurant business. She is evaluating three ...

Assignment1laura just opened a coffee shop in nyc named

Assignment 1. Laura just opened a coffee shop in NYC named Squirrel Coffee. Hoping to cater to the hipsters, she sells a special kind of cold brew infused with nitrogen, which she dubs ‘nitro coffee'. Assume for the purp ...

Assignment1in your own words please define describe and use

Assignment 1. IN YOUR OWN WORDS, please define, describe and use an example for the following term (see below). The term (including example) should be no more than 50 words.The following rubric is used to assess each ter ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro