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# The state Medicaid agency has set a rate of \$5.50 per visit

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The state Medicaid agency has set a rate of \$5.50 per visit for all Medicaid enrollees who visit a physician. Each physician also has private paying patients. The demand curve for each physician can be characterized as follows, and physicians can be regarded as individual monopolists.
Out of pocket price Quantity of visits demanded
\$8 0
7 1
6 2
5 3
4 4
3 5
2 6
1 7
Each physician also has a cost schedule that can be characterized as follow:
Quantity of visits provided Total cost
0 \$5
1 7
2 11
3 17
4 25
5 35
6 47

##### Solution Summary

The state Medicaid agency has set a rate of \$5.50 per visit for all Medicaid enrollees who visit a physician. Each physician also has private paying patients. The demand curve for each physician can be characterized as follows, and physicians can be regarded as individual monopolists.
Out of pocket price Quantity of visits demanded
\$8 0
7 1
6 2
5 3
4 4
3 5
2 6
1 7
Each physician also has a cost schedule that can be characterized as follow:
Quantity of visits provided Total cost
0 \$5
1 7
2 11
3 17
4 25
5 35
6 47

##### Solution Preview

I have worked on this question myself, before, when I was a graduate student. Here is the answer:

The lowest cost of the visit, at \$5.50, is two visits. We see an increase in the price per visit, after two visits, as noted in the ...

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