e. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her insurance pays all expenses above and beyond her copayment of S25 for each unit of Q. Consider again the relationship between PL and Pp and plot a copayment-plan demand curve in PL - Q space. Label this curve (peed answer for section "d 8 e"oply)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
(hand write) I just need you to solve E if you have to do only one question that is listed please do E!!!!
15. Fun with cost-sharing. An important distinction in health insurance is between the list price (P) and
out-of-pocket price (Pp) of a medical good or service. The list price is the official price that the provider
charges the insurance company, while the out-of-pocket price is the price that the insurance customer
faces. Sometimes, the out-of-pocket price depends on the list price.
a. Draw a set of axes with list price P on the y-axis and quantity Q on the x-axis (you will want to make your
graph nice and big, because we will be adding several demand curves).
b. Suppose a consumer's demand for a particular medical procedure is as follows: Q = 100 - Pp. Draw her
demand curve in PL - Q space under the assumption of no insurance and label it D1. You will have to think
about the relationship between PL and Pp to draw it correctly.
c. Now assume the same consumer is fully insured. Think about how this affects the relationship between PL
and Pp and draw a full-insurance demand curve in PL - Q space. Label this curve D2.
d. Now assume the consumer is part of a partial insurance plan with a coinsurance provision. Her insurance
pays 50% of all medical expenses. Consider again the relationship between PL and Pp and plot a
coinsurance plan demand curve in PL -Q space. Label this curve D3.
e. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her insurance
pays all expenses above and beyond her copayment of S25 for each unit of Q. Consider again the
relationship between PL and Pp and plot a copayment-plan demand curve in PL - Q space. Label this curve
D4. (need answer for section "d & e " only)
Transcribed Image Text:15. Fun with cost-sharing. An important distinction in health insurance is between the list price (P) and out-of-pocket price (Pp) of a medical good or service. The list price is the official price that the provider charges the insurance company, while the out-of-pocket price is the price that the insurance customer faces. Sometimes, the out-of-pocket price depends on the list price. a. Draw a set of axes with list price P on the y-axis and quantity Q on the x-axis (you will want to make your graph nice and big, because we will be adding several demand curves). b. Suppose a consumer's demand for a particular medical procedure is as follows: Q = 100 - Pp. Draw her demand curve in PL - Q space under the assumption of no insurance and label it D1. You will have to think about the relationship between PL and Pp to draw it correctly. c. Now assume the same consumer is fully insured. Think about how this affects the relationship between PL and Pp and draw a full-insurance demand curve in PL - Q space. Label this curve D2. d. Now assume the consumer is part of a partial insurance plan with a coinsurance provision. Her insurance pays 50% of all medical expenses. Consider again the relationship between PL and Pp and plot a coinsurance plan demand curve in PL -Q space. Label this curve D3. e. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her insurance pays all expenses above and beyond her copayment of S25 for each unit of Q. Consider again the relationship between PL and Pp and plot a copayment-plan demand curve in PL - Q space. Label this curve D4. (need answer for section "d & e " only)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Demand Shock
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education