Question #59627

Health Insurance. Determine the subsidy. ($millions)
D: P = 5,000 - Q
S: P = 400 + Q
Co-pay: P = 60

Expert's answer

D: P = 5,000 - Q

S: P = 400 + Q

In equilibrium Qd = Qs and Pd = Ps, so:

5,000 - Q = 400 + Q,

2Q = 4,600,

Q = 2,300 units.

P = 5,000 - 2,300 = $2,700.

If co-pay is P = 60, then the amount of the subsidy is 2,300*60 = $13,800.

S: P = 400 + Q

In equilibrium Qd = Qs and Pd = Ps, so:

5,000 - Q = 400 + Q,

2Q = 4,600,

Q = 2,300 units.

P = 5,000 - 2,300 = $2,700.

If co-pay is P = 60, then the amount of the subsidy is 2,300*60 = $13,800.

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