EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 18, Problem 5SP
To determine
Impact of legalization on the price and quantity of Kidneys.
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3rd party payments often cause the cost of health care to go down
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Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill.
a) what happens to the amount of market exchange ? b) explain the impact of the price ceiling on efficiency
c) who bears the cost of the regulation?
Chapter 18 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.arrow_forwardWhat are the equilibrium price and quantity of medical checkup?arrow_forwardWhat would happen if, in order to provide lower cost healthcare, the government decided to set a price ceiling (Pmax) in the health insurance market?arrow_forward
- Which kind of externality problems exists in the market for medical checkup? How does this externality problem affect the efficiency of the market? Explain in detail.arrow_forwardExplain how each of these situations will affect the quantity demanded of health insurance: a) A reduction in the tax-exempt fraction of health insurance premiums. b) An increase in buyer income. c) An increase in per capita medical expenses.arrow_forwardWhat would happen if, in order to provide lower cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Please answer questions a, b, and c below.) What is the effect of this maximum price legislation on the market for health insurance? Briefly explain the situation for both consumers and producers (i.e. health care providers). What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?arrow_forward
- 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?arrow_forwardWhat would the impact of price ceilings have on the field of medicine in the United States.arrow_forwardDiscuss your views on the effect of price on the demand for urgent or non-urgent medical care. Justify how access to care may be related to the value of good health.arrow_forward
- What would be the effects on price and quantity if physicians can induce demand?arrow_forwardWhy does taking a drug off a formulary increase the prices to the consumer?arrow_forwardSome 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. Should planners use price elasticity of demand as a guide to defining services that are medically necessary? What are the advantages of such a classification scheme? What are the drawbacks?arrow_forward
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