Consider the following information on Elizabeths demand for visits per year to her health clinic. (She does not have insurance: 100% coinsurance).

1. Derive the equation. Elizabeth has been paying $40 per visit. How many visits does she make per year? Calculate her total expenditures?
2. The insurance company institutes a 50 percent coinsurance feature (Elizabeth pays 50 percent of the price of each visit)? What is her new equilibrium number of visits? Calculate the new total expenditures on visits.
3. Calculate the expenditures by the insurer.
4. Calculate the increased well-being to the consumer due to the changed number of visits.
5. Calculate the loss to society brought about by moral hazard.
6. What is Moral Hazard? What are the ways that could be used by insurance companies to reduce moral hazard?