# Assignment help 3879

A survey of consumers indicates that if the price of a medical service (e.g. prescription drugs) is \$6, consumers will purchase 12 million units of the service, and if the price is \$12, consumers will purchase 9 million units.

a) Assuming that the inverse demand curve is linear (P = a – b Q), determine the following when P = \$10: quantity purchased, expenditure, and consumer surplus.

b) Suppose that the government provides insurance that covers 50% of the cost (s = insurance rate = 50%).  Determine the following when P = \$10: quantity purchased, consumer expenditure, government expenditure, consumer surplus, and deadweight loss.

Linear equation: P = a – bQwhere P= pricea= constantQ= quantityb = multiplying constant of Qat price = \$ 6, purchase = 12 million.At price = \$ 12, purchase = 9 million.Therefore our equation…

##### "Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp