Refer to the Table Shown That Depicts a Third-Party Payer

question 88

Multiple Choice

Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $2 co-pay is established? $$\begin{array} { | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \\\hline \$ 0 & 1,200 & 0 \\\hline \$ 1 & 600 & 150 \\\hline \$ 2 & 300 & 300 \\\hline \$ 3 & 0 & 450 \\\hline \$ 4 & 0 & 600 \\\hline \$ 5 & 0 & 750 \\\hline \$ 6 & 0 & 900 \\\hline \$ 7 & 0 & 1,050 \\\hline\end{array}$$

• A) $0
• B) $150
• C) $600
• D) $1,200

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Definitions:

Harm

Refers to damage or injury that negatively affects someone or something in a physical, psychological, or financial manner.

Marginal External Cost

The cost of producing one additional unit of a good or service that is borne by people other than the producer, often not reflected in the product's market price.

Socially Optimal

A state or outcome in which resource allocation maximizes social welfare, considering all costs and benefits to society.

Market Price

The current price at which an asset or service can be bought or sold, determined by supply and demand.