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1) Price discrimination that can be sustained occurs when
a. different brand drugs are sold in different places at different price at the same time
b. same brand drugs is sold in the same places at different prices at different times
c. different brand drugs are sold in the same places at different prices at the same time
d. the same brand drugs is sold in different places at different prices at the same time
2) Without insurance price of the drug is $500. Quantity demanded was 1,000. With insurance (Coinsurance rate is 10%) demand increases to 1,400. What is the social loss due to insurance?
a. $180,000
b. $90,000
c. $450
d. cannot be determined
3) Using info in the previous question, what is the social loss if the policy has share of the insurer at 60%? Here assume the quantity demanded will be 1,022.
$6,600
$300
$3,300
None of the above
explain how would this change affects the optimal investment rule for the firm.
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