Question: Can anyone help this problem, thank you very much A consumer has the following demand function for health care: P : 20 Q, where P

Can anyone help this problem, thank you very much

Can anyone help this problem, thank you very much A consumer has

A consumer has the following demand function for health care: P : 20 Q, where P denotes price and Q denotes quantity. Suppose that the price is 10. i) W hat is his quantity demanded, and what is his expenditure at the price of 10? (1 point) Now suppose that the consumer has a health plan with a deductible of $120. That is, he is responsible for the rst $120 of expenditure at the full price of 10. For any expense above $120, the coinsurance is 50% so the price reduces to 5. ii) What is the quantity that the consumer optimally chooses to consume under this deductible plan? (8 points). What is his total expenditure? (4 points) Use a diagram to illustrate your calculation and explanation. Next, there is a modication of the above deductible plan. There is now a lower coinsurance at 0% if the total expenditure reaches $150. In other words, for expenditure between $0 and $120, the consumer bears the full price of 10. For expenditure between $120 and $150, the consumer bears 50% of the price, so each unit costs 5. For expenditure higher than $150, the consumer bears no cost (but do assume that the consumer's maximum quantity does not exceed 20). iii) What is the quantity that the consumer optimally chooses under this twotier plan? (8 points] What is his total expenditure? (4 points) Again, use a diagram to illustrate your calculation and explanation. It is also acceptable to use one diagram to explain both parts ii) and iii)

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