There are two contrasting theories of physician behavior. The first is the traditional model and the second is referred to as "physician-induced demand" or "target income."
a. Explain each model and describe how each of these models differ in their assumptions regarding physician behavior and patient information.
b. What would be the consequences of an increase in the supply of physicians on the price of physician services, the quantity of physician visits, and total physician expenditures of each of these theories?