Now imagine that we have three demand curves:

Unhealthy person's demand for medical care: = 100 /span>

3. Now imagine that we have three demand curves: Unhealthy person's demand for medical care: D(q) = 100 p. Healthy person's demand for medical care: D(q) = 50 p/Z A very healthy person's demand for medical care: D(q) = 50 p The true price / marginal cost of medical services is $40 per unit. Graph the three demand curves. Graph a horizontal line representing price. Label the values of health care services demanded for each consumer when they pay the full price of those services. Now, assume the three consumers have insurance. The insurance plan charges a deductible of $1,200. After paying the deductible the insurance plan completely covers all additional medical services. Shade the area for the deductible on your graph. For each consumer note where on their demand curve they will consume given their insurance. Explain where we see over consumption due to moral hazard in this graph for the healthy and unhealthy consumers. Describe in words why and how the deductible reduces moral hazard for the very healthy