Assume that an individual's demand for the number of physician visits per year, Q, can be represented by the following equation: Q = 50-0.4 P, where P, the market price of an office visit, equals physician's constant marginal cost of $110. Calculate the efficient number of office visits If the individual has no insurance. Now suppose the individual purchases full insurance coverage and the demand for (but not quantity demanded of) physician care remains unchanged.
1. Determine the numbers of times would this fully insured person visit the physician?
2. Determine the welfare loss (DWL) associated with this insurance coverage.