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Suppose That the Demand Curve Dm for Medical Services Can

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Essay

Suppose that the demand curve Dm 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?


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