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price. P=10-Q. 9. 8. X. 7. 6. 5. Y. Z. 4. MC=AC=2. 3. 2. Quantity. MR. Demand for adults. A. Total welfare=A+B+C+D. 5.5. B. 45. Demand for seniors. C. 3. D. 60. To find the equation of line ABC Find slope: 5/200=1/40 So general equation is K-(1/40)q=p If p=0, K=6.25

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  1. price P=10-Q 9 8 X 7 6 5 Y Z 4 MC=AC=2 3 2 Quantity MR

  2. Demand for adults A Total welfare=A+B+C+D 5.5 B 45 Demand for seniors C 3 D 60

  3. To find the equation of line ABC Find slope: 5/200=1/40 So general equation is K-(1/40)q=p If p=0, K=6.25 Agg demand is 6.25-1/40(q)=p Agg MR is MR=6.25-(1/20)q A 6.25 B 5 C 50 100 150 250

  4. MR=MC 6.25-(1/20)q=1 q=105 3.625 Agg demand MC=1 105 Agg MR

  5. MR=MC 6.25-(1/20)q=1 q=105 A CS=ABECD PS=EFGC Welfare=ABECD+EFGC D C E B Agg demand G F MC=1 105 Agg MR

  6. PS=A+B+C CS=W+X+Y+Z W 80 X 60 A Y 40 B C Z 20 90 100 40 70

  7. 100 100 100 50 Type A Type B

  8. 2812.5 100 100 CSb=F=1406.25 P=25 100 q=37.5 75 50 Type A Type B

  9. U1 U0 Φ Q K

  10. price U1 Φ1 U0 Q Q2 Q1 K

  11. Ah pL Al c+r pH c MRH MRL High Low

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  14. P MC AC A FH Profit from high income patients FHADCALL C B FM Profit from middle income patients BCED F E CALL D Loss from low income patients EFHG H FL G Demand Q1 Q2 Q3

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