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Insurers want to understand the Bay Area market for pediatric physician primary care services, to help decide the appropriate reimbursement rate for a pediatric primary care visit. Let the demand for pediatric visits be Q = 240 – P, and let the supply of these visits be Q = 30 + 2P. Quantity is in number of pediatric visits, and price is in dollars.
A. What is the law of demand? Is it satisfied here?
B. Draw the demand and supply curves for the market for pediatric visits. Label the curves and the axes with titles, and calculate and label the equilibrium price and quantity. Remember, price is in dollars.
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