Mr. Lucas referred to a national study of copayment levels. The important results of this study are provided in Exhibit 3.

Using the six months of data provided in the Excel data file, simulate the profitability of the physician services department if copayments are increased to $20 per visit. Repeat your analysis using a copayment of $25 per visit. (from $15 per visit)

Copayment level Physician visits per capita Price elasticity of demand 10 6.3 15 6 0.095 20 5.7 0.150 25 5.4 0.211 30 5.1 0.278 35 4.8 0.353