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Demand and supply for well-baby visits pediatricians in in Fairfax County are shown below. The market period is one week. Assume that there is no...
Demand and supply for well-baby visits pediatricians in in Fairfax County are shown below. The market period is one week. Assume that there is no health insurance.
Price Demand Supply
120 1000 1240
115 1050 1230
110 1100 1220
105 1150 1210
100 1200 1200
95 1250 1190
90 1300 1180
85 1350 1170
80 1400 1160
75 1450 1150
70 1500 1140
65 1550 1130
A. Graph demand and supply and determine the market price/quantity. (a blank graph follows or you can use another, but one needs to be submitted. You can email it to me if that works better for you).
Over the next 10 years due to population growth and growing awareness of the importance of preventive care in the first few years of life, demand for well-baby visits grows by 2 percent per year. The supply of pediatricians increases by 1 percent per year as medical schools expand a little and a small number of additional pediatricians from foreign countries are certified to practice in the U.S.
B. Graph the new demand and supply after 10 years (you do not need to compound the growth (similar to compounding interest over time) when you do the math). What is the new market price/quantity.
C. What was the percentage increase in price after 10 years?
D. What happens if everyone is insured and the pediatrician is able to charge the market price as per the new equilibrium, but $65 of the fee is paid by the patient as a copay and the balance is paid by the insurance company? Be specific as to the shortage or surplus.
