Consumed only in units of homogeneous quantity

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Reference no: EM13898588

Suppose medical care is consumed only in units of a homogeneous quantity, for instance, office visits which are priced at $40 per visit. The available insurance plan carries a $200 deductible and has a coinsurance rate of 20%.

a) Graph the out-of-pocket price faced by the individual as more office visits are consumed.

b) Suppose individual A's demand curve is described by function: Q^(P) = (-3/32)P + 6.75. How much medical care will individual A consume?

Reference no: EM13898588

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