Refer to the figure below. If average real income in the community decreases, the demand curve for inpatient hospital services shifts to the right from D to D1. The equilibrium price will increase from Pe to P1 and the equilibrium quantity will increase from Qe to Q1. P1 Pe Select one: True O False Qe Q1 S D Q DI

Refer to the figure below. If average real income in the community decreases, the demand curve for inpatient hospital services shifts to the right from D to D1. The equilibrium price will increase from Pe to P1 and the equilibrium quantity will increase from Qe to Q1. P1 Pe Select one: True O False Qe Q1 S D Q DI

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter9: The Physicians’ Services Market

Section: Chapter Questions

Problem 1QAP

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Discuss what is known about price elasticities of demand for various health care services. Needs to discuss acute, chronic, well, dentistry; hospital, ambulatory
Suppose you are collecting data from a country like Japan where the government sets the price of health care. Each prefecture in Japan has a different set of prices (for example, Tokyo has higher prices than rural Hokkaido). Data for 1999 is displayed in Table 2.12. Table 2.12. Outpatient utilization in Tokyo and Hokkaido, 1999. Region Outpatient Visits Price/Visit Tokyo 1.25/month 20 Japenese Yen Hokkaido 1.5/month 10 Japanese Yen What is the arc price elasticity ofdemand for health care consumers in Japan (using only this data)?
All other things equal, if an individual earning $100,000 per year has an income elasticity of demand for health care of 0.4, if her salary increases by 10%, her expenditures on health care will increase by $4,000. True False
Suppose you have two persons, one with more elastic demand for medical care than the other. If they both obtain identical health insurance coverage (or both have their % of costs paid by insurance increased), whose demand will be affected most? Given what you know about relative demand for MC for well vs. ill individuals, more educated vs. less educated persons, and wealthy vs. less wealthy individuals, which of each pair will have the greatest increase in demand under health insurance?
The price elasticity of demand measures how much the quantity demanded responds to changes in the price. In health care, demand is relatively inelastic because close substitutes exists. a. True b. False
a. What is the arc price elasticity of demand for healthcare consumers in Japan using only this data? b. Using your estimated elasticity, what would the demand for health care be if the price in tokyo were raised to 30 per visit? What would the demand in Hokkaido be if the price were lowered to 5 per visit? Region Outpatient visits Price/ visit Tokyo 1.25/ month 20Y Hokkaido 1.5/ month 10Y
Explain how each of these situations will affect the quantity demanded of health insurance: a) A reduction in the tax-exempt fraction of health insurance premiums. b) An increase in buyer income. c) An increase in per capita medical expenses.
Assume that the government decides to subsidize the price of healthcare. The subsidy will be given directly to individual consumers of medical-related goods and services. Who is likely to benefit more from this subsidy: Providers (doctors, nurses, hospital staff, etc....) or Patients? Explain your answer using a supply and demand diagram.
Suppose you have an insurance plan in which you pay the market price for medical care until you meet a deductible of $1,000, after which you have a coinsurance rate of .20. Answer parts a and b assuming your inverse demand curve for medical care is P = 400 – 10Q and the market price for medical care is $200 per unit.a) Graph the price line and your demand curve. On the graph, label the values of the x and y intercepts of the demand curve, the quantity where you meet the deductible, the horizontal sections of the price line, and the point(s) where the demand curve intersects the price line.b) Find the number of units of medical care that you will demand. Show all calculations that youperformed in your analysis.
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What does income elasticity of demand mean for insurance companies and medical providers for making a decision?