Question

Suppose that the price of a unit of medical care is $100 and the person sinsurance policy covers up to $100,000 in expenditures incurred on behalf of the insured individual per year. Show graphically how the maximum payment limit affects the quantity demanded. Assume a zero co-pay up to the limit.

Answer 1

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Answer and Explanation:

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We can see from the graph that as the units in medical care demanded increases, insurance policy cover increases to meet maximum value =1000 units of medical care or $100000 in insurance policy cover for medical care