PLEASE ANSWER THE QUESTIONS IN BOLD: In a certain Midwest city, a series of studies were conducted to measure both the supply and demand for physician services at various price points. The table below represents the findings across ten different employers who offer self- insured health benefits to their employees. Observations were made across time at various price points and the data below was gathered. So, for instance, at a price of $50 for an office visit, the employees of Employer 1 consumed 150 visits per week; and at a price of $60, they only consumed 140 visits, etc. At the same time and in the same city, ten different primary care practices were observed and the data table below was generated. In this case, at a price point of $50 per visit, PCP1 was willing to supply 70 visits per week, but at $60, he would supply 80 visits, etc. Question #2 – assuming that, in the short-run, the supply of physician services will remain as expressed in Table 2 above, what will happen to the market clearing price and visit quantity? Show graphically what just happened. Again, in plain English, what is happening here? After another year, new measurements are taken, and we see that the demand for services has indeed settled into that predicted in Table 3 above. We also note that physicians’ willingness to supply services at various price points has shifted. The table below shows how: Table 2 Number of visits/ year Price/visit PCP 1 PCP 2 PCP 3 PCP 4 PCP 5 PCP 6 PCP 7 PCP 8 PCP 9 PCP 10 $ 50 70 40 57 45 50 47 91 110 40 50 $ 60 80 50 67 55 60 57 101 120 50 60 $ 70 90 60 77 65 70 67 111 130 60 70 $ 80 100 70 87 75 80 77 121 140 70 80 $ 90 110 80 97 85 90 87 131 150 80 90 $ 100 120 90 107 95 100 97 141 160 90 100 $ 110 130 100 117 105 110 107 151 170 100 110 $ 120 140 110 127 115 120 117 161 180 110 120 $ 130 150 120 137 125 130 127 171 190 120 130 $ 140 160 130 147 135 140 137 181 200 130 140 Number of visits/ year Price/visit Empl 1 Empl 2 Empl 3 Empl 4 Empl 5 Empl 6 Empl 7 Empl 8 Empl 9 Empl 10 $ 50 170 220 150 140 180 200 155 162 173 150 $ 60 160 210 140 130 170 190 145 152 163 140 $ 70 150 200 130 120 160 180 135 142 153 130 $ 80 140 190 120 110 150 170 125 132 143 120 $ 90 130 180 110 100 140 160 115 122 133 110 $ 100 120 170 100 90 130 150 105 112 123 100 $ 110 110 160 90 80 120 140 95 102 113 90 $ 120 100 150 80 70 110 130 85 92 103 80 $ 130 90 140 70 60 100 120 75 82 93 70 $ 140 80 130 60 50 90 110 65 72 83 60 Table 2 Number of visits/ year Price/visit PCP 1 PCP 2 PCP 3 PCP 4 PCP 5 PCP 6 PCP 7 PCP 8 PCP 9 PCP 10 $ 50 70 40 57 45 50 47 91 110 40 50 $ 60 80 50 67 55 60 57 101 120 50 60 $ 70 90 60 77 65 70 67 111 130 60 70 $ 80 100 70 87 75 80 77 121 140 70 80 $ 90 110 80 97 85 90 87 131 150 80 90 $ 100 120 90 107 95 100 97 141 160 90 100 $ 110 130 100 117 105 110 107 151 170 100 110 $ 120 140 110 127 115 120 117 161 180 110 120 $ 130 150 120 137 125 130 127 171 190 120 130 $ 140 160 130 147 135 140 137 181 200 130 140 Solution Price/visit PCP 1 Firs.

1. PLEASE ANSWER THE QUESTIONS IN BOLD: In a certain Midwest city, a series of studies
were conducted to measure both the supply and demand for physician services at various price
points. The table below represents the findings across ten different employers who offer self-
insured health benefits to their employees. Observations were made across time at various price
points and the data below was gathered. So, for instance, at a price of $50 for an office visit, the
employees of Employer 1 consumed 150 visits per week; and at a price of $60, they only
consumed 140 visits, etc. At the same time and in the same city, ten different primary care
practices were observed and the data table below was generated. In this case, at a price point of
$50 per visit, PCP1 was willing to supply 70 visits per week, but at $60, he would supply 80
visits, etc.
Question #2 – assuming that, in the short-run, the supply of physician services will remain as
expressed in Table 2 above, what will happen to the market clearing price and visit quantity?
Show graphically what just happened. Again, in plain English, what is happening here?
After another year, new measurements are taken, and we see that the demand for services has
indeed settled into that predicted in Table 3 above. We also note that physicians’ willingness to
supply services at various price points has shifted. The table below shows how:
Table 2
Number of visits/ year
Price/visit
PCP 1
PCP 2
PCP 3
PCP 4
PCP 5
PCP 6
PCP 7
PCP 8
PCP 9
PCP 10
$ 50
70
40
57
45
50

2. 47
91
110
40
50
$ 60
80
50
67
55
60
57
101
120
50
60
$ 70
90
60
77
65
70
67
111
130
60
70
$ 80
100
70
87
75
80
77
121
140

3. 70
80
$ 90
110
80
97
85
90
87
131
150
80
90
$ 100
120
90
107
95
100
97
141
160
90
100
$ 110
130
100
117
105
110
107
151
170
100
110
$ 120

4. 140
110
127
115
120
117
161
180
110
120
$ 130
150
120
137
125
130
127
171
190
120
130
$ 140
160
130
147
135
140
137
181
200
130
140
Number of visits/ year
Price/visit
Empl 1
Empl 2

5. Empl 3
Empl 4
Empl 5
Empl 6
Empl 7
Empl 8
Empl 9
Empl 10
$ 50
170
220
150
140
180
200
155
162
173
150
$ 60
160
210
140
130
170
190
145
152
163
140
$ 70
150
200
130
120
160

6. 180
135
142
153
130
$ 80
140
190
120
110
150
170
125
132
143
120
$ 90
130
180
110
100
140
160
115
122
133
110
$ 100
120
170
100
90
130
150
105
112

7. 123
100
$ 110
110
160
90
80
120
140
95
102
113
90
$ 120
100
150
80
70
110
130
85
92
103
80
$ 130
90
140
70
60
100
120
75
82
93
70
$ 140

8. 80
130
60
50
90
110
65
72
83
60
Table 2
Number of visits/ year
Price/visit
PCP 1
PCP 2
PCP 3
PCP 4
PCP 5
PCP 6
PCP 7
PCP 8
PCP 9
PCP 10
$ 50
70
40
57
45
50
47
91
110
40
50
$ 60
80

9. 50
67
55
60
57
101
120
50
60
$ 70
90
60
77
65
70
67
111
130
60
70
$ 80
100
70
87
75
80
77
121
140
70
80
$ 90
110
80
97
85

10. 90
87
131
150
80
90
$ 100
120
90
107
95
100
97
141
160
90
100
$ 110
130
100
117
105
110
107
151
170
100
110
$ 120
140
110
127
115
120
117
161

11. 180
110
120
$ 130
150
120
137
125
130
127
171
190
120
130
$ 140
160
130
147
135
140
137
181
200
130
140
Solution
Price/visit
PCP 1
First of all we need to find market demand and market supply.
PCP 2
PCP 3
PCP 4
PCP 5
PCP 6

12. PCP 7
PCP 8
PCP 9
PCP 10
Market Supply
$ 50
70
40
57
45
50
47
91
110
40
50
$ 60
80
50
67
55
60
57
101
120
50
60
$ 70
90
60
77
65
70
67
111
130

13. 60
70
$ 80
100
70
87
75
80
77
121
140
70
80
$ 90
110
80
97
85
90
87
131
150
80
90
$ 100
120
90
107
95
100
97
141
160
90
100
$ 110

14. 130
100
117
105
110
107
151
170
100
110
$ 120
140
110
127
115
120
117
161
180
110
120
$ 130
150
120
137
125
130
127
171
190
120
130
$ 140
160
130
147

15. 135
140
137
181
200
130
140
Number of visits/ year
Price/visit
Empl 1
Empl 2
Empl 3
Empl 4
Empl 5
Empl 6
Empl 7
Empl 8
Empl 9
Empl 10
$ 50
170
220
150
140
180
200
155
162
173
150
$ 60
160
210
140
130
170

16. 190
145
152
163
140
$ 70
150
200
130
120
160
180
135
142
153
130
$ 80
140
190
120
110
150
170
125
132
143
120
$ 90
130
180
110
100
140
160
115
122

17. 133
110
$ 100
120
170
100
90
130
150
105
112
123
100
$ 110
110
160
90
80
120
140
95
102
113
90
$ 120
100
150
80
70
110
130
85
92
103
80
$ 130

18. 90
140
70
60
100
120
75
82
93
70
$ 140
80
130
60
50
90
110
65
72
83
60
There is no price where quantity demanded and quantity supply are equal to each other. Hence,
equilibrium cannntobe attained. It is a non viable market. If supply curve shifts by 100 then
equilibrium will be established at $100.
Price/visit
PCP 1
First of all we need to find market demand and market supply.
PCP 2
PCP 3
PCP 4
PCP 5
PCP 6
PCP 7
PCP 8
PCP 9
PCP 10

19. Market Supply
$ 50
70
40
57
45
50
47
91
110
40
50600
$ 60
80
50
67
55
60
57
101
120
50
60700
$ 70
90
60
77
65
70
67
111
130
60
70800
$ 80
100

20. 70
87
75
80
77
121
140
70
80900
$ 90
110
80
97
85
90
87
131
150
80
901000
$ 100
120
90
107
95
100
97
141
160
90
1001100
$ 110
130
100
117
105

21. 110
107
151
170
100
1101200
$ 120
140
110
127
115
120
117
161
180
110
1201300
$ 130
150
120
137
125
130
127
171
190
120
1301400
$ 140
160
130
147
135
140
137
181

22. 200
130
1401500