Price Quantity economics homework help
(2.) Consider the following information on Ianâ€™s demand for visits per year to his health clinic, which is based upon the fact that his insurance does not cover clinical visits (that is, based upon a 100% coinsurance rate):
a. Ian has been paying $30 per visit (V). How many visits does he â€œconsumeâ€ per year? Draw his demand curve.
b. Suppose now that Ianâ€™s insurance company institutes a 70% coinsurance feature (that is, Ian pays 70% of the price of each visit). Show what happens to the demand curve. What is Ianâ€™s new equilibrium quantity?
c. Appraise this statement: Compared with a 70% coinsurance rate as in part (b), Ianâ€™s price elasticity of demand would lower if the coinsurance rate was 60%. (No calculations are needed to answer this question, so donâ€™t calculate elasticity!)