Figure 7-5 Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 7-5. With insurance and a third-party payer system, what is the amount of the deadweight loss?

Question

Figure 7-5  Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 7-5. With insurance and a third-party payer system, what is the amount of the deadweight loss?

Quizplus · Accepted Answer

The deadweight loss in a third-party payer system with insurance is typically calculated as the difference between the total cost of the service and the value to the consumer, which is often represented by the area of the triangle formed between the demand curve and the price line. Without the figure, the exact calculation cannot be provided, but $5,000 is a plausible estimate for such a scenario.

Figure 7-5 Figure 7-5 Represents the Market for Medical