Suppose that you have data at the individual level that includes information on the price of a docto visit an individual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with more generous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph the relationship between the price individual pays for doctor visits against the number of visits, and you see a downward sloping line; let's call this "measured demand." The problem of "endogeneity" discussed this week could arise here if individuals who know they go to the doctor frequently buy. generous coverage while those who know they rarely go to the generous coverage. This would imply that the "measured" demand curve is more elastic than the "true" demand curve. doctor purchase. more; less more; more
Suppose that you have data at the individual level that includes information on the price of a docto visit an individual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with more generous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph the relationship between the price individual pays for doctor visits against the number of visits, and you see a downward sloping line; let's call this "measured demand." The problem of "endogeneity" discussed this week could arise here if individuals who know they go to the doctor frequently buy. generous coverage while those who know they rarely go to the generous coverage. This would imply that the "measured" demand curve is more elastic than the "true" demand curve. doctor purchase. more; less more; more
Chapter12A: Appendix 12a Changing Demographics: The Aging Of America
Section: Chapter Questions
Problem 1QAP
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you