Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 2, Problem 6E
To determine
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When is use of the arc elasticity concept valid as compared with the use of the point elasticity concept?
using the point elastic formula,find the value of q1 if q2= 10 ,p1=30 p2= 40 and ped=1.5
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- Suppose Government of Pakistan wants to put a curb on public smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs Rs.175 and the government wants to reduce smoking by 30 percent, by how much should it increase the price? Kindly type only percentage change in the box given below. Do not use percentage sign in the box. Also, do not use any plus or minus sign in the box.arrow_forwardIf possible, please include made-up numerical values.arrow_forwardOver the range from $12 to $14, Qd goes from 30 to 24. Using this range of prices and quantities, you should calculate the coefficient of price elasticity of demand. In the box labeled E1, the coefficient of price elasticity of demand is: 2 6 1.36 1.44 In box E2, you would interpret the coefficient calculated in the previous question. Therefore, you would characterize this range as: Elastic Unit Elastic Inelastic None of the Abovearrow_forward
- Find the income elasticityarrow_forwardConsider the market for corn. The following graph shows the weekly demand for corn and the weekly supply of corn. Suppose a spell of unusually good weather occurs, which enables corn producers to generate more corn per acre of land. Show the effect this shock has on the market for corn by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. 20 Supply Demand 16 Supply Demand 10 20 30 40 50 QUANTITY (Millions of bushels) PRICE (Dollars per bushel)arrow_forwardWhen the price of oil was $95 per barrel, in thecountry of Wherever, 21,000 barrels of oil were produced per day. The elasticity of supply for oil producers in Wherever has been estimated to be 0.075. After a price change, Wherever's production increased to 21,750 barrels per day. Estimate the new price of oil.arrow_forward
- Concept of elasticity of demand and demand forecasting are variable tools for economic analysis .validate with rxamplesarrow_forwardDesigners of National Health Insurance proposals have been greatly concerned with a number of questions. What would happen to the quantity of various services demanded if prices to patients were cut to zero or were cut 75 percent? Knowledge of elasticities is crucial to answering these questions. In a recent study of the demand for dental care, Manning and Phelps estimated price elasticities separately for adult females, adult males, and children. Their results were as follows: a. b. C. d. Service Cleanings Fillings Extractions Examinations Dentures Crowns Orthodontia Adult Females .79 .58 -.21 .56 .59 -.54 Adult Males .14 .73 1.51 .03 -2.20 -.89 Children 1.34 .95 .97 .59 1.70 .08 Source: W.G. Manning, Jr. and C.E. Phelps, "The Demand for Dental Care," The Bell Journal of Economics, Autumn 1979, pp. 503-525. If prices to all patients were cut, would expenditure on examinations rise or fall? Why? {Note: Negative entries in the table refer to Giffen goods.} For which service would a…arrow_forwardIf the price of a good decreases from $6.50 to $5.75 and, as a result, the quantity demanded increases from 500 to 700. Using the midpoint method, the price elasticity of demand isarrow_forward
- 9. Application: Demand elasticity and agriculture The following graph illustrates the market for almonds. It plots the monthly supply of almonds and the monthly demand for almonds. Suppose an increase in pests destroys a major portion of almond trees. Show the effect this shock has on the market for almonds by shifting the demand curve, supply curve, or both Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Delars per tor G Supply O Demand Supply @ 4arrow_forwardThe demand for a commodity generally decreases as the price is raised. Suppose that the demand for oil (per capita per year) is D(p)=1000//p barreis, where p is the price per barrel in dollars. Find the demand when p=55. Estimate the decrease in demand if p rises to 56 and the increase in demand if p is decreased to 54. The demand D(55)= The decrease in demand =? barrels. The increase in demand =? barrels.arrow_forward2. The market demand function for strawberries is given by the equation: Q=276 2.5Pstr +0.6 I - 0.7 Pcr, str Where is the demand for strawberries in kilograms, Pstr is the price of strawberries per kilogram (in USD), str I is the household monthly income (in USD), and P is the price of cream per kilogram (in USD). Assume that Pstr is equal to $8, I is equal to $150, and Per is equal to $5. a. Determine the price elasticity of demand for strawberries. b. Determine the income elasticity of demand for strawberries. Is strawberry a normal/inferior good? Why? d. c. Determine the cross-price elasticity of demand for strawberries with respect to the price of cream. Based on your answer from (c), can we say cream and strawberries are substitute goods/ or complement goods? Why? Assume that the prices of strawberries and cream remain constant, but income increased three fold. What is going to happen on the demand for strawberries? Please use a diagram to provide your explanation. e.arrow_forward
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