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? Draw the graph alongwith explaining your answer

Answer 1

If you have an insurance policy that pays the amount of the doctor visit minus a copayment of $20, then you pay $20 for every doctor visit and your demand curve is P = 20.

If the doctor charges $60, then 60 - 5Q = 60,

Q = 0 visits.