EBK HEALTH ECONOMICS
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ISBN: 8220106671054
Author: TU
Publisher: YUZU
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Question
Chapter 2, Problem 5E
To determine
The arc elasticity of demand for the inpatient care and the outpatient care.
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Indicate 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.
Suppose 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 percent
Considering Healthcare price elasticity, would it be a good idea to implement a price increase on medical products?
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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 0arrow_forwardDiscuss what is known about price elasticities of demand for various health care servicesarrow_forwardDemand 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?arrow_forward
- 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 Falsearrow_forwardThe 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. Falsearrow_forwardSuppose 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?arrow_forward
- Comment on the elasticity of demand for medicinearrow_forwardPrice elasticities of the demand for health care are usually much lower (in absolute terms) at the individual provider level than at the aggregate level. a.True b.Falsearrow_forwardIndicate whether the statement is true or false, and justify your answer.Unlike the usual measure of elasticity, an arc elasticity can be calculated from just one price–quantity data point.arrow_forward
- Suppose you are collecting data from a country like Japan where the government sets the price of healthcare. Each prefecture in Japan has a different set of prices (for example, Tokyo has higher prices than rural Hokkaido). Data for 1999 are displayed in the table below. Region Outpatient Visits per Month Price per Visit Tokyo 1.25 25 Hokkaido 1.75 15 (4 points) What is the arc price elasticity of demand for health care consumers in Japan (using only these data)? (4 points) Suppose that incomes are generally much higher in Tokyo than Hokkaido. Is your answer to the last question an overestimate or underestimate of price elasticity? Justify your answer. (c) (4 points) 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?arrow_forwardInability of one to determine marginal value of health care implies that the traditional approach to demand theory does not work very well for health-care services. True or false?arrow_forwardAccording to Finkelstein et al. (2003), approximately what portion of national medical spending is directed toward the treatment of conditions attributed to obesity? A. One-eighth B. One-sixth C. One-quarter D. One-third E. One-halfarrow_forward
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