Question: assume healthcare is sold in discrete units in a competitive...
Assume healthcare is sold in discrete “units” in a competitive market, with the market price of healthcare equal to $100 per unit. Consider a patient whose health benefits (measured by her willingness-to-pay) from different quantities of healthcare are as follows:
HC Quantity Health Benefit ($)
- How many units of healthcare would the patient demand if she were uninsured?
- How many units of healthcare would the patient demand if she were covered by a health insurance policy that pays 90% of all medical expenses (i.e. a 10% coinsurance rate)?
Assuming healthcare prices are set equal to the costs of production, by how much does total economic surplus change between the scenario in part (a) and the scenario in part