Figure 5-3 Figure 5-3 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 5-3.The efficient price of medical services is

Question

Figure 5-3  Figure 5-3 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 5-3.The efficient price of medical services is

Quizplus · Accepted Answer

The efficient price is where the marginal cost (MC) intersects the demand curve (D) without insurance. In this case, the intersection point is at $55. With insurance, the demand curve shifts to the right, causing an increase in quantity demanded and a price increase to $65. This price is not efficient because it is higher than the intersection point of MC and D without insurance. Therefore, the efficient price is $55.

Figure 5-3 Figure 5-3 Represents the Market for Medical