Calculate the expenditures by the insurer

Reference no: EM13181204

If the price of a medical visit is $300,

a)calculate the equilibrium number of visits, and total expenditures.

b) Suppose that the consumer purchases an insurance policy that allows her to pay a 25% coinsurance rate. Calculate the new equilibrium number of visits and the total expenditures.

c) Calculate the expenditures by the insurer.

d) Calculate the increased well-being to the consumer due to the changed number of visits.

e) Calculate the "loss" to society brought about by moral hazard. Explain why it is a loss.

Reference no: EM13181204

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