Assume that health insurance is private in a country, and the market for insurance iscompetitive. The figure below shows the marginal benefit and willingness and abilityto pay curve.Premium (thousands of dollars per year)30 million.40 million.10 million.20 million.12O10CO62O10D = MB5020 30 40Quantity (millions of families insured)Suppose that the marginal social benefit of insurance exceeds the willingness andability to pay by a constant $2,000 per family per year. Suppose the marginal cost ofhealth insurance is a constant $8,000 a year. What is the efficient quantity of healthinsurance policies?

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) 30 million. 40 million. 10 million. 20 million. O co 6 4 2 10 D = MB 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. What is the efficient quantity of health insurance policies?

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) 30 million. 40 million. 10 million. 20 million. O co 6 4 2 10 D = MB 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. What is the efficient quantity of health insurance policies?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Adverse selection arises in the market for health insurance because Moral hazard arises in the market for health insurance because OA. for many people, the price of health insurance is beyond their ability to pay for it; the marginal social benefit of healthcare exceeds the marginal benefit perceived by its consumers OB. people optimistically underestimate the health risks that they face; people take too short a view of the benefits of healthcare OC. O D. some of the healthiest people choose to not buy insurance; once insured, a person has less incentive to adopt a healthy lifestyle once insured, a person has less incentive to adopt a healthy lifestyle; some of the healthiest people choose to not buy insurance;
Asymmetric Information - End of Chapter Problem Car buyers value a high-quality used car at $16,000 and a low-quality used car at $8,000. The supply of high-quality cars is given by QH = -200+ 0.05 P; the supply of low-quality cars is given by Q₁ = -200+ 0.1 P₁ . Potential buyers cannot tell Он the difference between high-quality and low-quality cars when purchasing one, and buyers believe there is a 75% chance that a used car will be of high quality. Find the price buyers are willing to pay for a car of unknown quality and then determine the percentage of high-quality cars that will actually be on the market. Use this information to answer the following questions. a. The change in the proportion of high-quality cars causes the expected value of a used car of unknown quality to rise to $14,320. fall to $13,680. rise to $17,680. fall to $10,320. b. As a result of this change in expected value, the number of high-quality cars offered for sale will be number of low-quality cars offered…
12 Demand elasticity and social loss. Consider two vaccines for difffferent viruses χ and Ω Assume that the marginal cost of producing both drugs is constant and that the fixed cost is small. In other words, assume that the supply curve for both drugs is flat. a Suppose that demand for vaccine χ is price elastic, whereas demand for vaccine Ω is relatively inelastic. Plot the private demand curve for both drugs on separate axes. b For the sake of example, assume that both viruses have the same externality. Plot the social demand curve for both drugs and label the social loss in each case. c Explain intuitively why, all else equal, social loss is greater in the case of elastic demand than it is in the case of inelastic demand.
5 a.) Draw a market where consumers demand health insurance and insurance companies supply insurance at a price of insurance called the premium. Explain why, in this model of the insurance market, the individual mandate will cause health insurance premiums to increase.
2 Premium (thousands of dollars per year 6 $80 million. $160 billion. $80 billion. $160 million. 10 8 4 N HA 10 wom D = MB 30 40 50 20 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?
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. 12 10 8 606 4 2 0 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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Consider the following information on Alfred’s demand for visits per year to his health clinic, if his health insurance does not cover (100 percent coinsurance) clinic visits. Price Quantity 5 9 10 9 15 9 20 8 25 7 30 6 35 5 40 4 a. Alfred has been paying $25 per visit. How many visits does he make per year? Find his demand curve. b. What happens to his demand curve if the insurance company institutes a 40 percent coinsurance feature (Alfred pays 40 percent of the price of each visit)? What is his new equilibrium quantity? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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6 Explain why does the government act as a producer of health insurance for certain population group?