This scenario applies to the following several questions.

Part A: A person is considering whether to buy insurance or to go uninsured. Their demand for medical services is Q=75 - P. They can choose to go uninsured, to get full insurance, to get a 50% coinsurance plan, or to get aplan with a $25 deductible. The list price of the medical service is $50.

The next several questions will have you calculate the Q and SL for each option.Before you do the calculations, think about which scenario ought to have the highest social loss, and why.Which scenario would you expect to have the highest social loss?

a. copay plan

b. full insurance

c. uninsurance

d. coinsurance plan

Part B: What would be the Q and social loss if they were uninsured?

a. Q=25,SL=0

b. Q=50, SL=25

c. Q=50,SL=0

d. Q=25,SL=25

Part C: What would be the Q and social loss if they got the 50% coinsurance plan?

a. Q=100, SL=500

b. Q=50, SL=312.5

c. Q=50,SL=0

d. Q=25,SL=725

Part D: What would be the Q and social loss if they got the $25 copay plan?

a. Q=25, SL=150

b. Q=100,SL=100

c. Q=25,SL=725

d. Q=50, SL=312.5

Part E: What would be the Q and social loss if they got full insurance?

a. Q=75, SL=1250

b. Q=75, SL=2500

c. Q=50,SL=2500

d. Q=25,SL=625

Part F: Now you've calculated the quantity and social loss for each option. Which one had the highest social loss?

a. coinsurance plan

b. full insurance

c. uninsurance

d. copay plan