In Los Angeles, the demand for Botox injections (a procedure that removes wrinkles and smoothes the skin) is as shown in the following diagram. The marginal cost of a Botox injection is $1,000 and the procedure is not currently covered by health insurance.

a. By how much will total economic surplus change if the city council passes a law requiring employers to include full reimbursement for Botox injections in their employees' health coverage?
b. How would the change in total economic surplus be affected if the law instead required health insurance to pay only $500 per procedure?

Transcribed Image Text:

1,000 40 ,000s of procedureslyear