Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 2, Problem 7E
To determine
The elasticity of
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In a commentary piece on the rising cost of health insurance, ("Healthy, Wealthy, and Wise," Wall Street Journal, May 4,
2004, A20), economists John Cogan, Glenn Hubbard, and Daniel Kessler state, "Each percentage-point rise in
health-insurance costs increases the number of uninsured by 300,000 people." Assuming that their claim is correct,
demonstrate that the price elasticity of demand for health insurance depends on the number of people who are insured.
What is the price elasticity if 192 million people are insured?
If 192 million people are insured, then the price elasticity of demand for health insurance is (Enter a numeric
response using a real number rounded to three decimal places. Be sure to include the minus sign.)
What is the price elasticity if 247 million people are insured?
(Enter a numeric
If 247 million people are insured, then the price elasticity of demand for health insurance is
response using a real number rounded to three decimal places. Be sure to include the…
Considering Healthcare price elasticity, would it be a good idea to implement a price increase on medical products?
All other things equal, if an individual earning $100,000 per year has an income elasticity of demand for health care of 0.4, if her salary increases by 10%, her expenditures on health care will increase by $4,000.
True
False
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- Indicate whether the statement is true or false, and justify your answer.In the RAND HIE, the arc elasticity of demand for inpatient care was larger (in absolute value) than the arc elasticity of demand for outpatient care.arrow_forwardIndicate whether the statement is true or false, and justify your answer.Unlike the usual measure of elasticity, an arc elasticity can be calculated from just one price–quantity data point.arrow_forwardConsider the following box-and-whisker plot from Hall and Jones (2007). When focused on the youngest age group, a 20% increase in medical spending is associated with: FIGURE 3.1 Elasticity of health with respect to medical spending, by age. 0.5 - 0.4 - 0.3 - 0.2 - 0.1 - 20 40 60 80 100 Age Source: Hall and Jones, 2007. Note: “Whiskers" show standard errors of the estimates for each age group. 4% increase in conditional life expectancy 20% increase in conditional live expectancy O 8% increase in conditional life expectancy Elasticity of health with respect to medical spendingarrow_forward
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