Solution 1 An insurance marker consists of high risk patients who average 40 000 in spending per year and low risk patients who average 1 000 per year
Solution An insurance marker consists of high risk patients who average in spending per year and
Solution An insurance marker consists of high risk patients who average in
consists of high risk patients who average in spending per year and low risk patients who average per year
Solution An insurance marker consists of high risk patients who
average in spending per year and low risk patients who average per year
Solution An insurance marker consists of high risk
Solution An insurance marker
(Solution) 1 An insurance marker consists of high-risk patients, who average \$40,000 in spending per year, and low-risk patients, who average \$1,000 per year.

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6.1 An insurance marker consists of high-risk patients, who average \$40,000 in spending per year, and low-risk patients, who average \$1,000 per year. Overall, low-risk patients represent 90 percent of the population. What would average spending be for a population like this? 6.2 Refer to Exercise 6.1. What would average spending be if low-risk patients were 92 percent of the population? 6.3 Refer to Exercise 6.1. If an insurer sold 100,000 policies at \$6,000, what would revenue be? What would medical costs be if the insurer paid for everything and low-risk patients were 90 percent of the population? How would that change if low-risk patients were 92 percent of the population? 5.7 It takes a phlebotomist 15 minutes to complete a blood draw. The supplies for each draw cost \$4, and the phlebotomist earns \$20 per hour. The phlebotomy lab is designed to accommodate 20,000 draws per year. Its rent is \$80,000 per year. What are the average and incremental costs of blood draw when the volume is 20,000? 10,000? What principle does your calculation illustrate?            5.8 How would the average and marginal costs change if the phlebotomist’s wage rose to \$24 per hour? What principle does your calculation illustrate? 5.9 A new computer lets a phlebotomist complete a blood draw in 10 minutes. The supplies for each draw cost \$4, and the phlebotomist earns \$20 per hour. The phlebotomy lab is designed to accommodate 20,000 draws per year. Its rent is \$80,000 per year. What is the marginal cost for a blood draw? What principle does your calculation illustrate? 5.10 Use the data in Exercise 5.7. How would the average and marginal costs change if the rent rose to \$100,000? What principle does your calculation illustrate?