Consider the four following potential treatments for a sprained ankle:

Treatment	Total Cost	Pain Reduction Units (PRUs)
Do nothing	$0	0 units
Ankle brace	$100	15 units
Physical Therapy	$500	35 units
Cortisone injection	$600	30 units
Surgery	$1000	40 units

a. Plot these points on the below cost-pain reduction axis.

b. Are any of these treatments dominated? Why?

c. Connect each of the potentially cost effectiveness treatments to draw a cost effectiveness frontier.

d. Calculate the ICER between each treatment on the frontier relative to the next cheapest treatment.

e. Suppose youve decided that people are generally willing to pay $50 per unit of pain reduction (i.e. they value each unit of pain reduction at $50. Determine which treatment is therefore the most cost effective treatment. Explain how you determined this (and draw the appropriate indifference curve on your graph).

f. Suppose you were designing an insurance plan that covered treatment for sprained ankles. You want to have the lowest coinsurance possible, but also want people to still pick the most cost effective treatment (i.e. make the same treatment choice as if they didnt have insurance). What is the lowest coinsurance rate you could apply to sprained ankle treatment to be sure people still choose the most cost effective treatment? Explain how you came up with your answer.