Define supplier-induced demand

Assignment Help Macroeconomics
Reference no: EM1377071 , Length: 1200 Words

1. Demand and supply curves of physician care services per day are given by the following equations: Qd = 800 - 5P and Qs = 100 + 4P, where Q is the number of visits in a day and P is the fee per consultation.

(a) Find the equilibrium quantity and fee in this market. What is the total expenditure in the market per day?

(b) Introduce insurance with 20% coinsurance. The insurance is provided free of charge (no premium). What will be the impact of introducing the insurance on quantity, consultation fee and health care expenditure per day? Compare these after-insurance levels with the pre-insurance situation.

(c) Rather than offering insurance with 20% coinsurance, assume that the insurance was introduced with a copayment of $110 per visit. What will be the effects of this insurance on the market compared to no-insurance situation? [Discuss the effects on quantity, fee and expenditure]

(d) Start from the no-insurance situation again (using the demand-supply curves).  Introduce insurance with indemnity payment of $40 per consultation. Compare the market outcomes of this insurance with no-insurance situation.

2. Demand function faced by a physician is d = 600 - 3 F, where d is the number of consultancies provided per month and F is the fee per consultation. The physician care market is characterized by monopolistic competition. If the marginal cost of producing a consultation is given by M=20, find the optimal level of d and F for the physician.

3. Define a perfectly discriminating physician (discriminating monopolist).

The demand curve for the physician is: d=400 - 4F. The marginal cost curve is: M=40. Note that the marginal cost curve and average cost curve are the same. Calculate the income of the physician if she is trying to maximize income in a competitive market (monopolistic competition). What will be the income of the physician if she is a perfectly discriminating monopolist (the objective is again maximization of income)? Compare these two income levels. Which market structure provides higher income?

4. If the income levels of all individuals are equal, the "index" of demand for physician services will be proportional to the population in an area (i.e., demand for physicians will be double in an area compared to another area if the population of the area is double of the other area).  Similarly, if the average income of the area is higher than the other area, the index will be multiplied by the income elasticity and income ratios of the two areas (income elasticity x (income of one year/income of another area)). In the table below, population and average income levels are shown for the areas A, B, C. D and E. Consider area "E" as the comparison area for your calculations. Assume that all the areas are equal in geographic size. If there are 500 physicians in this country, find the number of physicians to be located in each of the areas if the physicians are income maximizers.

Area

Pop

Income/cap

A

7558900

42500

B

2185000

15800

C

55000

35200

D

22500

25500

E

10300

10830

5. Define Supplier-Induced Demand (SID). We are interested to find out the increased utilization of physician care services because of SID. Propose a research study to identify the presence of SID and its effect on the utilization of physician services.

Verified Expert

Reference no: EM1377071

Questions Cloud

Break even analysis : Aldo Redondo drives his own new car on firm business. His boss reimburses him for travel at the rate of thirty-six cents per mile. Aldo estimates that his fixed cost per year such as taxes,
Discuss major topics of historical events : Suppose if, as we have been told, the longest journey begins with 1st step, then 1st step of our journey through time will place us at the threshold of an era known as Renaissance and the year 1500,
Informational interview or topic selection preparation : Chose to do an informational interview, start thinking of your topic and interview questions now. See the course project description for more information on this project component.
Illustrate the recruitment process : Think about an organization seeking to recruit 7-trainers to facilitate learning interventions for sales people at the company's 2,500 distributors around the US.
Define supplier-induced demand : Define Supplier-Induced Demand and propose a research study to identify the presence of SID and its effect on the utilization of physician services.
Formulating a numerical hypothesis statement : The firm is facing the dilemma of a much required demand for alternative fuel for the nation, and it has seen a sudden spike in product demand.
Abilities of a potential employee : Interview question can become a test. Sometimes it is in interest of the candidate and the firm that hiring managers use valid tests.
Examples of validity options : Many methods carry more reliability and validity than others. A good Human Resource professional knows when to use which method.
Impact on equation of accounting or journal entries : Record these transactions and any other required adjusting entries by showing their impact on the fundamental equation of accounting or journal entries.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  As per international political economics theory

As per international political economics theory as a central part, I need to identify problems with organizing the international currency system.

  Government places a price floor on milk which is below

The government places a price floor on milk which is below the current equilibrium price of milk. The number of children who drink milk and the number of farmers who produce milk increase at the same time.

  Explanation about inflation and policies

Mention and explain the two types of inflation. Which sort of inflation would most likely be associated with the negative GDP?

  Elucidate why is it that market leaders and monopolies

Elucidate why is it that market leaders and monopolies generally acquire rather than develop new technology.

  What do you think branded products usually are

What do you think branded products usually are of higher quality than generic products and therefore justify their higher prices.

  True or false questions on marginal revenue

Characterize each of the following statements as true or false, and explain your answer.

  Elucidate what would advantages and disadvantages system

A possible international monetary regime consists of a world central bank conducting monetary policy and issuing a single currency used throughout the world. Elucidate what would the advantages and disadvantages of such a system be.

  Find quantity -price and price elasticity of demand

The Wozniak Corporation, a maker of aircraft engines, determines that in 2008 the demand curve for its product is as follows-What is the price elasticity of demand if price equals $500?

  Structure of the current income tax system

There is always debate regarding the structure of current income tax system in United State Many opponents of the current system argue that under its current structure,

  Economic considerations of screening the blood supply

A recent report indicatesthat nearly 50 Americans contract HIV every year through blood transfusions. Although every pint of blood donated in the United States undergoes a battery of 9-different tests,

  Explain how the environmental protection agencys policies

Explain how the Environmental Protection Agencys policies impact business in the US.

  Calculation of gain and loss

The annual demand for coffee by the U.S consumers is Q = 250 - 10P. Compute the lost consumer surplus?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd