If the price of a medical visit is $300,
a)calculate the equilibrium number of visits, and total expenditures.
b) Suppose that the consumer purchases an insurance policy that allows her to pay a 25% coinsurance rate. Calculate the new equilibrium number of visits and the total expenditures.
c) Calculate the expenditures by the insurer.
d) Calculate the increased well-being to the consumer due to the changed number of visits.
e) Calculate the "loss" to society brought about by moral hazard. Explain why it is a loss.