Question: The analysis surrounding Figure 10 5 assumes that a person receiving
The analysis surrounding Figure 10.5 assumes that a person receiving government health insurance is not allowed to purchase supplemental private insurance. Show how the diagram must be modified if, to the contrary, individuals can purchase additional health insurance cover-age. Another assumption behind the model is that government health insurance is “ free” in the sense that individuals do not pay any taxes for it. Show how the model must be modified if government health insurance is financed by taxes.
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