Use the following figure for questions 8 through 10

Suppose that Q₀ = 10 office visits,Q₁ = 20 office visits,P₀ = 10,and P₁ = 2.The increased expenditures due to insurance are:

Question

Use the following figure for questions 8 through 10

Suppose that Q₀ = 10 office visits,Q₁ = 20 office visits,P₀ = 10,and P₁ = 2.The increased expenditures due to insurance are:

Quizplus · Accepted Answer

The total expenditure before insurance was Q0*P0 = $100.By only paying 20% of the cost, the patient sees the $10 cost as a $2 cost and increases their quantity to 20 office visits, but the total cost is really at the old price of $10, which would imply a total cost of (10)(20) = 200. Therefore, the increase in expenditures is $100.

Use the Following Figure for Questions 8 Through 10