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The equilibrium price for physiotherapy visits is $30 and the quantity utilized is 150 visits as a result of the demand and supply conditions in this diagram. The state legislature is concerned that the current price does not give the physiotherapists enough incentive to produce a high volume of services. A proposal has been made to increase the price paid by the consumers to the suppliers to $40. what will the resulting quantities demanded and supplied and the resulting utilization be?
Price $ supply40 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- -- -- -30 - - - - - - - - - - - - - - - - - - - - - - intersects here -- - -- - -- - -- - -- - -- - -- - - Demand10 - - -
50 100 150 200 250
Constrained optimisation model
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