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How many hospital visits are purchased

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Health Demand: Aggregate demand for hospital visits in the US is given by Q = 10,000,000 - 100P. The supply of hospital visits is perfectly elastic, with a market price per visit of $10,000.

a) How many hospital visits are purchased?

b) What is the total amount of money spent on hospital visits?

c) A new universal health insurance policy provides insurance to everyone in the country, which pays 80% of all medical costs. After this policy is enacted, what will happen to the total amount of money spent on hospital visits?

d) What is the deadweight loss from moral hazard caused by this policy?

Reference no: EM132243947

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