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Suppose from your randomized experiment you observed two data points: An average number of outpatient care visit of 3.25 per year among individuals who are

Suppose from your randomized experiment you observed two data points:

An average number of outpatient care visit of 3.25 per year among individuals who are assigned to health insurance plan with 25% coinsurance rate. And

An average number of outpatient care visit of 1.05 per year among individuals who are assigned to the same health insurance plan with only difference of 75% coinsurance rate.

Is the date you observed provide evidence for downward sloping demand? Why?

Calculate the price elasticity of demand

Is this demand elastic or inelastic? Why?

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