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Assignment:
1. Suppose the market demand function for medical care: Qd= 800 - P and the market supply function for medical care is Qs= -400 + P.
a) Graph the supply and demand functions in the typical manner with price (P) on the Y- axis and quantity of medical care (Q) on the X-axis, showing their intercepts.
b) What is the equilibrium price and quantity?
c) Suppose health insurance is provided to all consumers. The insurance policy has a 50% coinsurance rate.
a. Draw the new market demand curve with insurance
b. Calculate the new equilibrium price and quantity
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