Graph of Alfred’s Demand for Clinic Visits
Consider the following information on Alfred’s demand for
visits per year to his health clinic, if his health insurance does not cover
clinic visits (100% coinsurance rate).
P Q
5 9
10 9
15 9
20 8
25 7
30 6
35 5
40 4
(a) Alfred has been paying $30 per visit. How many visits
does he make per year? Draw his demand curve.
(b) What happens to his demand curve if the insurance
company institutes a 40% coinsurance feature (Alfred pays 40% of the price of
each visit)? What is his new equilibrium demand?
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