Consider the following 2 health insurance plans. Plan A has a deductible of $600 per year and a coinsurance rate of 40%. Plan B has a deductible of 2,000 per year and a coinsurance rate of 15%.
Draw a budget constraint for a family with an annual income of $40,000, under both plans assuming medical care has a price of $50 per unit and nonmedical goods have a price of 1. At what quantity of medical care do the budget constraints form both plans cross?