Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 2, Problem 6E
To determine
The usual measures of
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When is use of the arc elasticity concept valid as compared with the use of the point elasticity concept?
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.
Over 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 Above
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- P & A Ch 05 Q10 Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.2. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 10%, it should increase the price by ? %. If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be ( larger / smaller ) than the effect 3 months from now. Studies also find that teenagers have a higher price elasticity of demand than do adults. Which of the following statements are consistent with this result? Check all that apply. Adults are more likely to be addicted to cigarettes. Teenagers do not have as much income as adults, so they are more price sensitive. It is legal for adults to consume alcohol, so many choose to spend their money on that good rather than cigarettes.arrow_forwardWhen the price is raised from P1 to P2, the price elasticity of demand computed using the endpoint method is: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
- Benny used to sell rubber boots at R125 per pair. At this price he was able to sell 50 pairs of boots per day. When he increases the price to R140 per pair, his sales decrease to 42 pairs per day. Use the point method to calculate the elasticity of this product.arrow_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_forwardConcept of elasticity of demand and demand forecasting are variable tools for economic analysis .validate with rxamplesarrow_forward
- Designers 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_forwardThe rate of change of revenue (in dollars per calculator) from the sale of x calculators is R'(x) = (x + 3) In (x + 3). Find the total revenue from the sale of the first 17 (x+ 3)² calculators. (Hint: In this exercise, it simplifies matters to write an antiderivative of x + 3 as 2 + 3x.) 2 rather than The total revenue is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to two decimal places as needed.)arrow_forward
- For this question and the next few following, you should use the dataset below. Over the range from $4 to $6, Qd goes from 48 to 44. Using this range of prices and quantities, you should calculate the coefficient of price elasticity of demand. In the box labeled A1, the coefficient of price elasticity of demand is: 4 .22 2 .33arrow_forward9. 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_forward
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