Chapter 8: Pages 195-197, Exercise #8 The equilibrium price for physiotherapy vi

Question

Chapter 8: Pages 195-197, Exercise #8

The equilibrium price for physiotherapy visits is $30 and the quantity utilized is $150 visits as a result of the demand and supply conditions in the diagram. The state legislature is concerned that the current price does not give the physiotherapist enough incentive to produce a high volume of services. A proposal has been made to increase the price paid by the consumers to the suppliers to $40. What will the resulting quantities demanded and supplied and the resulting utilization be?

This is the book we are using Jacobs, P. (2004). Economics of Health and Medical Care (5th ed). Jones & Bartlett Publishers.

How do I solve this problem. See book for the diagram or tell me if I need to recreate if for you. This is due Monday, June 24, 2013

Thanks

Explanation / Answer

sorry answer is quantity demanded is 100 and quantity supplied is 200 ( direct observation from the diagram). Since price has increased from equilibrium so quantity demanded has decreased and quantity supplied has increased

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