Question

A. Draw a demand and supply curve for a physician office visits where there is no insurance coverage. Indicate the equilibrium price and quantity of office visits in the market. 2. B. On your diagram above, draw in the market demand curve where there is a 50% coninsurance rate (assume everyone has insurance now? What happens to the equilibrium price (paid by the insurer and received by the physician) and quantity of office visits? What happens to the net price paid by the consumer.

Answer 1

The demand curve will be downward sloping for physicians visit.

Also at  50% coinsurance the demand curve will move rightward.

and in such case some of price will be bear by insurance company.

The demand curve will be downward slopping for physicians visit. Also at 50% coinsurance the demand curve will move rightwards and in such case some The demand curve for physician visit with 'no insurance' is downwards sloping Let us assume different price & physician visits. In the given case equilibrium will be achived when price be $ 100 & 40 visits Taking the same data if '50 % consercace' is there the demand curve move to its right. Supply curve will uemass same. The price paid by customer reduce out of $ 150 (50%) i.e. $75 would be paid by insurance company of price will be bear by insurance company.