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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

  1. Suppose from your randomized experiment you observed two data points:
    1. 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
    2. 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.
      1. Is the date you observed provide evidence for downward sloping demand? Why?
      2. Calculate the price elasticity of demand
      3. Is this demand elastic or inelastic? Why?

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