The state Medicaid agency has set a rate of $5.50 per visit for all...

  1. Home
  2. Homework Library
  3. Business
  4. Economics
  5. The state Medicaid agency has set a rate of $5.50 per visit for all...


The state Medicaid agency has set a rate of $5.50 per visit for all Medicaid enrollees who visit a physician. Each physician also has private paying patients. The demand curve for each physician can be characterized as follows, and physicians can be regarded as individual monopolists.

Out of pocket price= $8, 7, 6, 5, 4, 3, 2, 1. Quantity of visits demanded= 0, 1, 2, 3, 4, 5, 6, 7. Each physician also has a cost schedule that can be characterized as follows: Quantity of visits provided= 0, 1, 2, 3, 4, 5, 6. Total cost= $5, 7, 11, 17, 25, 35, 47.

a. If each physician is a profit maximizing provider, how many visits will he/she provide to public and private patients?

b. What will the number of visits provided be if the Medicaid Agency lowers its rate to $3 per visit, but the demand remains the same?

Solution PreviewSolution Preview

This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.

If monopolist physician charges $6 and provide 2 for private paying patients, then his profit will be $1 (=$12-$11), but MR:5>4:MC, so he can make more profit by providing more visits....

By purchasing this solution you'll be able to access the following files:

50% discount

$10.00 $5.00
for this solution

or FREE if you
register a new account!

PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

Find A Tutor

View available Economics Tutors

Get College Homework Help.

Are you sure you don't want to upload any files?

Fast tutor response requires as much info as possible.

Upload a file
Continue without uploading

We couldn't find that subject.
Please select the best match from the list below.

We'll send you an email right away. If it's not in your inbox, check your spam folder.

  • 1
  • 2
  • 3
Live Chats