Varying price distortion and price sensitivity (a) (b) pricety … Pu Pr huge A tinv social loss social Less price distortion Greater distortion P P In Figure B,price distortion and price sensitivity are minimal. Insured individuals bear most of the cost of their cheeseburgers, and their demand for burgers is not very sensitive to prices anyway.In this case,there is still moral hazard but it produces a much smaller social loss. Bhattacharya,Hyde and Tu-HealthEconomics Bhattacharya, Hyde and Tu – Health Economics Varying price distortion and price sensitivity In Figure B, price distortion and price sensitivity are minimal. Insured individuals bear most of the cost of their cheeseburgers, and their demand for burgers is not very sensitive to prices anyway. In this case, there is still moral hazard but it produces a much smaller social loss