Suppose that you have data at the individual level that includes information on the price of a doctor visit an individual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with more generous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph the relationship between the price individual pays for doctor visits against the number of visits, and you see a downward-sloping line; let's call this measured demand.

The problem of endogeneity could arise if individuals whoknowthey go to the doctor frequently buy more generous coverage while those who know they rarely go to the doctor purchase less generous coverage. This would imply that the true demand curve, if we were to account for endogeneity, is:

A) same as

B) more inelastic than the measured demand curve