Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $1 co-pay is established? $$\begin{array} { | c | c | c | }
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 1,200 & 0 \
\hline \$ 1 & 600 & 150 \
\hline \$ 2 & 300 & 300 \
\hline \$ 3 & 0 & 450 \
\hline \$ 4 & 0 & 600 \
\hline \$ 5 & 0 & 750 \
\hline \$ 6 & 0 & 900 \
\hline \$ 7 & 0 & 1,050 \
\hline
\end{array}$$
A) $0
B) $600
C) $1,800
D) $2,400

Question

Refer to the table shown that depicts a third-party payer market. What is the cost of this program to the third-party if a $1 co-pay is established? $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \text { Quantity Demanded } & \text { Quantity Supplied } \
\hline \$ 0 & 1,200 & 0 \
\hline \$ 1 & 600 & 150 \
\hline \$ 2 & 300 & 300 \
\hline \$ 3 & 0 & 450 \
\hline \$ 4 & 0 & 600 \
\hline \$ 5 & 0 & 750 \
\hline \$ 6 & 0 & 900 \
\hline \$ 7 & 0 & 1,050 \
\hline
\end{array}$$
A) $0
B) $600
C) $1,800
D) $2,400

Quizplus · Accepted Answer

With a $1 co-pay, the consumer pays $1, and the third-party covers the rest. At $1, the quantity demanded is 600, and the quantity supplied is 150. The equilibrium price is $2 (where quantity demanded equals quantity supplied). The third-party pays $1 per unit for 600 units, totaling $600, plus the difference between the $2 equilibrium price and the $1 co-pay for 600 units, which is $600. Therefore, the total cost is $1,800.

Refer to the Table Shown That Depicts a Third-Party Payer