2. Suppose that it costs $20 to visit a doctor. The typical consumer's income is $100. Consumers spend all of their inco

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2 Suppose That It Costs 20 To Visit A Doctor The Typical Consumer S Income Is 100 Consumers Spend All Of Their Inco 1 (84.67 KiB) Viewed 84 times

2. Suppose that it costs $20 to visit a doctor. The typical consumer's income is $100. Consumers spend all of their income on doctor visits and a composite other good that costs $1. (a) Draw this consumer's budget constraint, putting doctor's visits on the horizontal axis. Label all intercepts. Now suppose there are two possible health plans. Under plan A, each consumer will get a voucher for 2 free visits to the doctor. Under plan B, each consumer will get four coupons with 50% discount for the doctor's visits. (b) Draw the new budget line if plan A is implemented. All problems were created by Valentina Kozlova or are reproduced under ss. 29-29.4 of the Canadian Copyright Act. No part of these problems may be distributed or reproduced in any form or by any means. (c) Draw the new budget line if plan B is implemented. (d) For whom is the choice of plan A or plan B not likely to matter - those who are quite well, or those who are quite sick? (Hint: Superimpose some indifference curves on your budget lines.) (e) Which plan would someone who is generally well be likely to choose, if offered a choice?