Question

Assume your demand curve is P=60-5Q. Now draw your demand curve when you have an insurance policy that pays the amount of the doctor visit minus a copayment of $20. How much will you demand if the doctor charges $60?

Answer 1

Given, P = 60 - 5Q

Or, Q = 12 - 0.2P

When P = 0, Q = 12

When P = $ 10, Q = 10

Likewise we can calculate for different prices refer the attached picture below

With insurance we have to pay a only $ 20 remaining amount will be paid through insurance. Thus, the resultant price for us is $ 20.

For example when doctors visit cost $ 60 then through insurance we will receive $ 60 - $ 20 = $ 40

So cost of per visit to us = $ 20

Number of Visits with insurance = 8 visits.

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