Suppose medical care is consumed only in units of a homogeneous quantity, for instance, office visits which are priced at $40 per visit. The available insurance plan carries a $200 deductible and has a coinsurance rate of 20%.
a) Graph the out-of-pocket price faced by the individual as more office visits are consumed.
b) Suppose individual A's demand curve is described by function: Q^(P) = (-3/32)P + 6.75. How much medical care will individual A consume?