Question 2 (35 pts) Insurance, cost-sharing and social loss. Let the inverse demand for health care be given by
P={(200-.5Q if Q<100),(300-1.5Q if Q>=100):}
where
P
and
Q
are the price and quantity of care, respectively. Suppose the equilibrium price without insurance is
P_(U)=160
. a. ( 5 pts ) Draw the inverse demand curve and locate in your figure the equiliforium price
P_(U)
and the equilibrium quantity without insurance
Q_(U)
.

Question

Question 2 (35 pts) Insurance, cost-sharing and social loss. Let the inverse demand for health care be given by

P={(200-.5Q if Q<100),(300-1.5Q if Q>=100):}

where

P

and

Q

are the price and quantity of care, respectively. Suppose the equilibrium price without insurance is

P_(U)=160

. a. ( 5 pts ) Draw the inverse demand curve and locate in your figure the equiliforium price

P_(U)

and the equilibrium quantity without insurance

Q_(U)

.

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