EBK HEALTH ECONOMICS
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ISBN: 9781137029973
Author: TU
Publisher: YUZU
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Chapter 2, Problem 2E
To determine
The acceptability of the given statement.
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Based on the data presented in the table below estimate elasticity of demand for two price changes: a) price increase from $3 to $9 per hour; and b) price decrease from $9 to $3 per hour. Make sure to use the midpoint formula.
Price Per Hour of Therapy
Demand for Therapy
0
16
1
15
2
14
3
13
4
12
5
11
6
10
7
9
8
8
9
7
10
6
11
5
12
4
13
3
14
2
15
1
16
0
Demand studies in health care have provided estimates of both income and price elasticity. Estimates of income elasticity are usually above +1.0. Estimates of price elasticity typically range between -0.1 and -.75 (with hospital services at the lower end and elective services at the upper end).
What information do these estimates convey?
What does the price elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?
What does the income elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?
Considering Healthcare price elasticity, would it be a good idea to implement a price increase on medical products?
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