Ralph has a demand curve for office visits (Qd) to the doctor in a year given by
Question:
Ralph has a demand curve for office visits (Qd) to the doctor in a year given by Qd = 20 – (P/10) where P is the price of an office visit for Ralph.
Draw this demand curve with the usual Price/Quantity axes and label the intercepts on each axis. What is the most that Ralph would pay for one doctor visit?
How many doctor visits would Ralph make if they cost $50? What price would result in Ralph seeing the doctor 10 times in a year?
If the list price of an office visit is $50 and Ralph purchases health insurance in which he has a coinsurance rate of 20% (so Ralph pays only $10 for each visit), how many additional office visits at a list price of $50 does Ralph make relative to when he did not have insurance?
If the marginal cost to the doctor for providing each visit is $50, what is the value of the moral hazard cost (hint: area of a triangle) resulting from Ralph buying this insurance?
Expert Answer:
a The demand curve for office visits is given by Qd 20 P10 To draw the demand curve we can rearrange ... View the full answer
