EBK HEALTH ECONOMICS
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ISBN: 8220106671054
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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- Indicate whether the statement is true or false, and justify your answer.At firms that do not provide health insurance, the wages of obese workers are lower than the wages of non-obese workers with similar levels of productivity.arrow_forwardIndicate whether the statement is true or false, and justify your answer.For a given disease (with all else equal), if a vaccine has a higher prevalence elasticity of demand, a vaccine subsidy will be a more effective tool to control the equilibrium number of people infected with the disease.arrow_forwardComment on the elasticity of demand for medicinearrow_forward
- The proportion of an insurance company’s premium income spent on provision of treatments is called the formulary. capitation per member per month. point of service. medical loss ratio. total premium.arrow_forwardIndicate whether the statement is true or false, and justify your answer.In the RAND HIE, the arc elasticity of demand for inpatient care was larger (in absolute value) than the arc elasticity of demand for outpatient care.arrow_forwardIndicate whether each statement is true or false, and justify your answer.Both ICERs and ACERs compare two drugs on the basis of both cost and medical efficacy.arrow_forward
- Indicate whether the statement is true or false, and justify your answer.Many countries in the world have experienced increases in the number of obese individuals in their population, but only the US has seen increases in childhood obesity.arrow_forwardSuppose the income elasticity of demand for health care insurence is 0.3. If the level of income decreasesd by 1 percent , The demand for health insurence will 1.rise By.29 percent 2.rise by 0.3 percent 3.Fall by .29 percentarrow_forwardYou are given the following demand for European luxury automobiles: Q= 1,000P-0.93 Pa0.75 Pj1.2 I1.6 Where P = Price of European luxury cars; Pa = Price of American luxury cars; Pj = Price of Japanese luxury cars; and I = Annual income of car buyers. Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, address the following: What is the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. What is the coefficient for the income variable. What is he coefficient of the European car price variable. Be sure to include your work for all calculations.arrow_forward
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