Economics Answers

Suppose the equilibrium price for an average hospital stay in the absence of insurance is $10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers a policy to lower the out of the pocket price of a stay to $100, and at that price, 1200 people are hospitalized.
a. Is the demand for hospital care elastic or inelastic?
b. How much moral hazard results from this type of insurance IF the supply curve is flat, that is, if horizontal at P = $10,000 per stay, regardless of how many?

Assume your demand curve is P=60-5Q. Now draw your demand curve when you have an insurance policy that pays the amount of the doctor visit minus a copayment of $20. How much will you demand if the doctor charges $60? Draw the graph alongwith explaining your answer

An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he does get sick, the medical bills will total 30,000. The following tables shows the utility derived from certain amounts of income:

Income Utility
40,000 200
37,000 195
35,000 190
30,000 170
20,000 140
10,000 100
Considering the probability of illness, what is the expected utility of income without insurance? explain.

An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he does get sick, the medical bills will total 30,000. The following tables show the utility derived from certain amounts of income:

Income Utility
40,000 200
37,000 195
35,000 190
30,000 170
20,000 140
10,000 100
A. Is this person risk neutral, risk-loving or risk averse? Why?
B. Considering the probability of illness, what is the expected income without insurance?

Consider the following scenario: Joe’s initial income Y is $10,000. Joe experiences illness with a probability of 20%. Joe’s total medical costs associated with the illness are $1000.
A. What is the amount of medical coverage he should buy?
B. If Joe must pay a premium of $300 for insurance (i.e., 0% coinsurance rate, no deductible), what is the loading fee?

A firm sold 2 000 product units per day in 2017. The average monthly
household income in an economy increased by 25% in 2018. How many
products did the company sell in 2018 if the income elasticity for the
product was calculated at 0.4?

On a health production function, a developing country would be on the _____ part of the curve and a developed country would be on the ______ part of the curve.

Gloria wants to open her own restaurant. She has already purchased a building and raised enough cash to purchase the furniture, tools, and equipment required. She has also hired waitstaff and some cooks. However, she is unable to find a person who will be able to come up with interesting recipes every day. What type of factor of production is Gloria lacking?

consider the simplest macro model with demand-determined output. the equations of the model are : C= 150+0.8YD, I = 400, G = 700, T = 0.2Y, X = 130, and IM = 0.14Y. Total autonomous expenditure in this month are?

Price elasticity of demand for a commodity is unity and a household demands 50 units of it when its price is rupees 2 per unit. At what price will the household demands 45 units of the commodity?