Currently, There Is a $0

question 5

Essay

Currently, there is a $0.50 copayment on drugs. The HMO has decided to raise this to $1.00 per prescription. The cost of a prescription is $6.00, which means the HMO's contribution to the total cost will fall from $5.50 to $5.00. Currently, the arc elasticity of demand is about -0.5 for prescriptions, and the HMO members use 2.2 prescriptions per capitA) How much will be de?manded after the new copayment is put into effect, and how much money will this save the HMO?

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Basic mathematical computations including addition, subtraction, multiplication, and division.

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