The demand function is Q = 600 – P, with P being the price paid by consumers. Put a list of prices ranging from $400 to $0 in a column labeled P. (Use intervals of%50)

a.       Consumer shave insurance with 40 percent coinsurance. For each price, calculate the amount  that consumers pay. (Put this figure in a column labeled P net)

b.      Calculate the quantity demanded when there is insurance. (Put this figure in a column labeled DI)

c.       Plot  the demand curve, putting P (not P net) on the vertical axis. 

d.      The quantity supply equals 2 x P. Put these values in a column labeled S.

e.       What is equilibrium price?

f.       How much do consumer spend?

g.      How much does the insurer spend?

Transcribed Image Text:

P Du P net D 1 S $1,000 960 920 880 560 176 912 952 840 800 760 720 680 640 600 560 P Du P net D 1 S $1,000 960 920 880 560 176 912 952 840 800 760 720 680 640 600 560

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