Microeconomics (7th Edition)
Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 7, Problem 7.3.12PA
To determine

The effect on health insurance companies due to the demand for medical services.

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Answer the following questions: a. Some health analysts believe that physicians try to increase their income by inducing demand for their services. For example, physicians may order unnecessary tests and treatments. Why would patients willingly accept these additional tests and treatments? b. How does the Internet, which makes freely available all sorts of information about diseases and their treatments, affect the physician–patient relationship?
In the United States, most hospitals are non-profit, while nearly all pharmaceutical companies are for profit. Can you offer an explanation based on the consumer shopping problem?
Briefly explain what is “signaling” (from an economist’s view) and how it may reduce adverse selection.
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