If the original price of medical care (with no insurance) equal $1,000, the quantity demanded =...

If the original price of medical care (with no insurance) equal $1,000, the quantity demanded = 10. If insurance (Policy X) is provided,

out of pocket drops to $400. Also the quantity of medical care that will be demanded rises to 40.

What is the value of social loss due to insurance?

$18,000

$36,000

$600

$60

none of the above

Solutions

Expert Solution

$18,000

(Value of social loss due to insurance = (Original price of medical care - Price with insurance)*(Original quantity demanded - New demand with insurance) = (1000-400)*(40-10) = 600*30 = $18,000)

Rahul Sunny answered 1 year ago

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