Assume that health insurance is private in a country, and the market for insurance is competitive. The figure below shows the marginal benefit and willingness and ability to pay curve.

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Chapter1: Making Economics Decisions
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Assume that health insurance is private in a country, and the market for insurance is
competitive. The figure below shows the marginal benefit and willingness and ability
to pay curve.
Premium (thousands of dollars per year)
$160 billion.
$80 billion.
$160 million.
$80 million.
O
00
6
N
D = MB
10
20 30 40 50
Quantity (millions of families insured)
Suppose that the marginal social benefit of insurance exceeds the willingness and
ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of
health insurance is a constant $8,000 a year. If the government decides to provide
public health insurance, how much will taxpayers have to pay?
Transcribed Image Text:Assume that health insurance is private in a country, and the market for insurance is competitive. The figure below shows the marginal benefit and willingness and ability to pay curve. Premium (thousands of dollars per year) $160 billion. $80 billion. $160 million. $80 million. O 00 6 N D = MB 10 20 30 40 50 Quantity (millions of families insured) Suppose that the marginal social benefit of insurance exceeds the willingness and ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of health insurance is a constant $8,000 a year. If the government decides to provide public health insurance, how much will taxpayers have to pay?
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