EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN: 9781337668279
Author: Henderson
Publisher: YUZU
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Chapter 5, Problem 9QAP
To determine
Whether
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Demand falls by 5 percent for every 10 percent increase in price health care services. How much is the won price elasticity of demand for health care?
Please answer the following questions thoroughly:
Some argue that the price elasticity of demand can be used to determine whether a good or service is a luxury or a necessity. In medical care, a procedure with an elastic demand would be considered optional, or elective, and a procedure with an inelastic demand would be a medical necessity.
1) Should planners use price elasticity of demand as a guide to defining services that are medically necessary?
2) What are the advantages of such a classification scheme?
3) What are the drawbacks?
What factors cause Physician Induced Demand, and how do you diagnose it?
Chapter 5 Solutions
EBK HEALTH ECONOMICS AND POLICY
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- Discuss what is known about price elasticities of demand for various health care servicesarrow_forwardConsidering Healthcare price elasticity, would it be a good idea to implement a price increase on medical products?arrow_forwardSuppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%. Suppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%. a. fall; 0.3% b. rise; 0.9% c. rise; 0.3% d. fall; 0.9%arrow_forward
- 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 percentarrow_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
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