Suppose a company has invented and patented a new effective drug to treat hay fever. The marginal cost of producing the drug is: .Without being covered in any insurance plan, the market demand is as follows:

Qdemand=800-40P

b)Suppose now the public health insurer introduces the payment limit of $7.5 per unit of the drug; that is, the co-insurance rate of 25% applies if but the insurance only pays $7.5 per unit if. Derive the new market demand.Under this new market demand, what price should the firm charge? Justify your answer.