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)
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)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(hand write) I just need you to solve E if you have to do only one question that is listed please do E!!!!

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)
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