Mr. Ramirez referred to a national study of copayment levels. The important results of this study are provided in Exhibit 3. a. Calculate the price elasticity of demand for physician visits at each copayment level using the arc method. What does the data tell you about the price elasticity of demand for physician visits? How does this information help Mr. Green in making his decision?

Sample Means for Annual Use of Health Care Services

Copayment. Physician Visits Level Per capita $10 6.3 $15 6.0 $20 5.7 $25 5.4 $30 5.1 $35 4.8 Source: Demand for Health Care Services at Different Copayment Levels: Results Based on a National Study of Health Insurance Enrollees