Problem: Consider the following information on Alfred's demand for visits per year to his health clinic, if his health insurance does not cover clinic visits (100% coinsurance rate).
P Q
5 9
10 9
15 9
20 8
25 7
30 6
35 5
40 4
(1) Alfred has been paying $30 per visit. How many visits does he make per year? Draw his demand curve.
(2) What happens to his demand curve if the insurance company institutes a 40% coinsurance feature (Alfred pays 40% of the price of each visit)? What is his new equilibrium demand?