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Question

A person is considering whether to buy insurance or to go uninsured.

Their demand for medical services is Q=75 - P. They can choose to go uninsured, to get full insurance, to get a 50% coinsurance plan, or to get a plan with a $25 deductible. The list price of the medical service is $50. 
The next several questions will have you calculate the Q and SL for each option. Before you do the calculations, think about which scenario ought to have the highest social loss, and why. 


1.    What would be the Q and social loss if they got the $25 copay plan?
a. Q=25, SL=150
b. Q=100, SL=100
c. Q=25, SL=725
d. Q=50, SL=312.5

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Subject: Business, Economics

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