Suppose that you have data at the individual level that includes information on the price of a doctor visit anindividual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with moregenerous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph therelationship between the price individual pays for doctor visits against the number of visits, and you see a downwardsloping 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 doctorfrequently buy more generous coverage while those who know they rarely go to the doctor purchase less generouscoverage. This would imply that the "true" demand curve (if we were to account for endogeneity) is_________the same as.less inelastic than the measured demand curve.more inelastic than the measured demand curve.

The responsiveness of the quantity required of an item or service to a change in the price of that…

Suppose that you have data at the individual level that includes information on the price of a doctor 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 t relationship between the price individual pays for doctor visits against the number of visits, and you see a downwa 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 more generous coverage while those who know they rarely go to the doctor purchase less genero coverage. This would imply that the "true" demand curve (if we were to account for endogeneity) is the same as. less inelastic than the measured demand curve. more inelastic than the measured demand curve. 00

Suppose that you have data at the individual level that includes information on the price of a doctor 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 t relationship between the price individual pays for doctor visits against the number of visits, and you see a downwa 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 more generous coverage while those who know they rarely go to the doctor purchase less genero coverage. This would imply that the "true" demand curve (if we were to account for endogeneity) is the same as. less inelastic than the measured demand curve. more inelastic than the measured demand curve. 00

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.9P

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