Suppose That the Demand Curve D_m for Medical Services Can

question 16

Essay

Suppose that the demand curve D_m for medical services can be characterized by the equation M = 2000 - P,where M is the amount of medical services received per year and P is the price.Suppose further that P₀ is constant at 800.
(a)Find the equilibrium quantity of services at P₀.
(b)Find the equilibrium quantity of services when there is only a co-payment of 20% required such that the price is 0.2P₀.
(c)How much additional expenditures induced by insurance are created?

---

Definitions:

Assimilation

Assimilation is a cognitive process where individuals integrate new information into existing frameworks or schemas.

Accommodation

In cognitive development, the process of modifying existing cognitive schemas, perceptions, and understandings to incorporate new information.

Sensorimotor

Relating to or involving both sensory and motor functions, or the stage in Piaget's theory of cognitive development (from birth to about 2 years) where infants learn through sensory and motor interaction with the world.

Primary Circular Reactions

Early infantile behaviors that repeat because the infant finds them pleasurable, occurring in the sensorimotor stage of development.