Demonstrate how the quantity and price of medical services

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Use a supply-demand graph to demonstrate how the quantity and price of medical services are expected to be affected if we went from a world without insurance to a world where the government covered 90% of all medical costs. Assuming that prices are set competitively (i.e. set equal to MC of producing services), show in the graph how we could measure the “efficiency loss” (or deadweight loss) associated with health care over-consumption. Does the existence of this “efficiency loss” mean that citizens are worse off with the government’s provision of this insurance?

Reference no: EM13862652

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