Calculate price elasticity of demand

Reference no: EM132154208

Question: Suppose from your randomized experiment you observed two data points about demand for healthcare:

- An average number of outpatient care visit of 2.65 per year among individuals who are assigned to health insurance plan with 40% coinsurance rate. And,

- An average number of outpatient care visit of 1.45 per year among individuals who are assigned to the same health insurance plan with only difference of 80% coinsurance rate.

a) Is the data you observed provide evidence for downward sloping demand? Why?

b) Calculate price elasticity of demand

c) Is the demand elastic or inelastic? Explain.

Reference no: EM132154208

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