A consumer’s demand for a medical service is as follows: Q = 100 – PP where PP is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, and a copayment plan with a $25 copay. Assume this service has a list price of PL = $70. Calculate Q under each insurance plan: uninsured , fully insured , 50% coinsurance , and copayment plan Do you observe evidence of moral hazard? (yes or no?)

A consumer’s demand for a medical service is as follows: Q = 100 – PP where PP is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, and a copayment plan with a $25 copay. Assume this service has a list price of PL = $70. Calculate Q under each insurance plan: uninsured , fully insured , 50% coinsurance , and copayment plan Do you observe evidence of moral hazard? (yes or no?)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter16: Information, Risk, And Insurance

Section: Chapter Questions

Problem 20CTQ: A website offers a place for people to buy and sell emeralds, but information about emeralds can be...

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