Figure 5-4
Figure 5-4 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 5-4.The efficient price of medical services is

Question

Figure 5-4
  Figure 5-4 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 5-4.The efficient price of medical services is

Quizplus · Accepted Answer

The efficient price is where the marginal cost (MC) intersects with the demand curve (D). In this case, the intersection point is at a price of $40, which is the efficient price. Option A is incorrect because it is below the intersection point and leads to excess demand. Option C is incorrect because it is above the intersection point and leads to excess supply. Option D is incorrect because it implies that there is no equilibrium point where supply and demand intersect, which is not the case in this market.

Figure 5-4 Figure 5-4 Represents the Market for Medical Services