Suppose that the demand for a particular drug is given by D(p)=200-p, while the supply is given by S(p)=3p. When this medicine is covered by insurance, covered individuals pay only the co-payment of $10 instead of paying the full market price.

(a) By how much does consumption of this drug increase when insurance is introduced?

(b) How much will insurers have to pay the producers for each unit of the drug when it's covered?

(c) True, false or uncertain: consumers buying more medicine as the price falls is a manifestation of the moral hazard problem here.

(d) True, false or uncertain: observing producers charging higher price after insurance is introduced provides evidence of the moral hazard problem being present.