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1. Suppose the market demand for medical care amongst Nathan's employees is summarized by the market...

1.
Suppose the market demand for medical care amongst Nathan's employees is summarized by the market demand function
Qd = 200-2p;
And the market supply is
Qs=20 + 2p
(5 pts each)
a. What is the equilibrium quantity and price if there is no health insurance?
b. Given the demographics of Nathan's, actuaries estimate that there is a 25% chance that they will have to make an insurance payment. Given your answer in a., what would be an actuarially fair income from premiums?
c. What is the quantity demanded if insurance is complete (that is, 100% of the cost is covered; what is the price suppliers would want to supply this level of medical care?
d. What would be the actuarially fair income from premiums?
e. What is the equilibrium price and quantity with a 10% co-insurance rate? (hint: coinsurance is the percentage of the price the patient pays)
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