6. Suppose Harry is a residence of Morris, Minnesota and he has no insurance (he is uninsured). Accidently, he feels sick and he has to buy the medical service that costs him $200 per unit out- of-pocket. At this price, he can buy 20 units of services. (a) Depicts this scenario in a well leveled diagram Next, let us assume that Harry has insurance from the Minnesota State. But, the policy has 20% coinsurance rate. (b) How much is his effective price at the new scenario? Under this policy, Harry will buy 100 units of care. (c) Extend the diagram in part (a) above and depict the scenario and level it. (d) How much is the moral hazard due to insurance? (d) How much is the social cost due to insurance? (e) How much is the Harry's gain from insurance? If the coinsurance rate increases from 20% to 30%, what could be the impact of that policy change on moral hazard and social loss due to insurance? Draw a clearly leveled diagram and answer this question. 6. Suppose Harry is a residence of Morris, Minnesota and he has no insurance (he is uninsured). Accidently, he feels sick and he has to buy the medical service that costs him $200 per unit out- of-pocket. At this price, he can buy 20 units of services. (a) Depicts this scenario in a well leveled diagram Next, let us assume that Harry has insurance from the Minnesota State. But, the policy has 20% coinsurance rate. (b) How much is his effective price at the new scenario? Under this policy, Harry will buy 100 units of care. (c) Extend the diagram in part (a) above and depict the scenario and level it. (d) How much is the moral hazard due to insurance? (d) How much is the social cost due to insurance? (e) How much is the Harry's gain from insurance? If the coinsurance rate increases from 20% to 30%, what could be the impact of that policy change on moral hazard and social loss due to insurance? Draw a clearly leveled diagram and answer this