Consider a competitive market for healthcare. First suppose there is no health insurance available. Suppose demand for health care is given by

Q_D =20 -2P where Q_D is the quantity demanded and P is price. Supply is given by Q_S = 2P where Q_S is quantity supplied.

(a) Show the supply and demand schedules on the diagram.

(b) Find the equilibrium price and quantity.

(c) Now suppose the government introduces an insurance program which pays 50% of all health care expenditures. Placing prices faced by firms on the Y-axis, display supply and demand schedules under this insurance plan on a new diagram.

(d) find the new equilibrium price and quantity.

(e) Indicate the deadweight loss caused by the insurance program on your diagram.