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Demand for Medical Care and Co-Insurance.

a. Draw a diagram of the effective demand curve for medical care where a consumer will consume 4 units of medical care at $60.

b. On the same diagram, add a line indicating the demand for the same consumer in part a who has a coinsurance rate of 10%.

c. Use the information to derive the derive nominal market price for medical care with a 10% coinsurance rate.

d. On the same diagram, show that what portion the consumer pays with insurance and what portion the insurer pays with insurance.

e. What happens to the curve when the co-insurance rate to the consumer is zero?