1. Assume that Ibuprofen is NOT covered by health insurance.What does happen to the price and quantity exchanged of Ibuprofen, in the short term and holding everything else constant, if the price of Tylenolincreases sharply. Explain your answer. [5 points]
2. Now, assume that Ibuprofen becomes a mandated benefit that is covered fully by all health insurance plans. Explain what happen to the quantities demanded of Ibuprofen with this new mandate. To answer this question, focus solely on the demand and ignore the supply. [5points]
3. What is the economic phenomenon displayed in Q2? State it. No explanation needed. [5points]

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In the short term if the price of Tylenol increases sharp... View the full answer