1.A consumer's demand for a medical service is as follows:

Q = 100 - PP

where PP is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, a 50% coinsurance

plan, and a copayment plan with a $25 copay.

(a)Derive a general expression for social loss as a function of x and P_L, where x is the copay amount under a copayment plan. For simplicity's sake, assume x < P_L.

(b)Derive a general expression for social loss as a function of y and P_L, where y is the coinsurance rate.