Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 6, Problem 15AP
a)
To determine
Identify Herfindahl–Hirschman index in the market.
b)
To determine
Identify the value of Herfindahl–Hirschman index.
c)
To determine
Identify the largest value of H.
d)
To determine
Identify the value of Herfindahl–Hirschman index after the firm has entered.
e)
To determine
Identify the value of H in a
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Students have asked these similar questions
(a) Suppose there are three hospitals in a market. Hospital #1 has a market share of 20%, Hospital #2 has a market share of 30%, and Hospital #3 has a
market share of 50%. Calculate the Herfindahl-Hirschman Index for this market.
(b) is the following statement TRUE or FALSE? Defend your answer with an explanation.
"Moral hazard in health insurance strengthens the link between hospital competition and lower prices for patients
(c) Suppose research studies on gallbladder removal surgery have found evidence that patients experience better health outcomes at hospitals that
conduct this surgery more frequently. List two reasons why this relationship might development and explain your reasoning.
interest). At what age is the rate of disease development the
highest?
Source: Adapted from P. Coleman et al., “Endemic Stability―A Veterinary
Idea Applied to Public Health," The Lancet 357 (2001): 1284–86.
19. If C(x) is the cost of producing x units of a commodity, then
the average cost per unit is c(x) = C(x)/x. The marginal
cost is the rate of change of the cost with respect to the
number of items produced, that is, the derivative C'(x).
(a) Show that if the average cost is a minimum, then the
marginal cost equals the average cost.
(b) If C(x) = 16,000 + 200x + 4x³/2, in dollars, find
(i) the cost, average cost, and marginal cost at a produc-
tion level of 1000 units; (ii) the production level that
will minimize the average cost; and (iii) the minimum
average cost.
20. If R(x) is the revenue that a company receives when it sells
x units of a product, then the marginal revenue function is
the derivative R'(x). The profit function is
Some economists have suggested that the best way to control medical costs is to remove the profit incentive for health care providers, particularly hospitals. This would involve making all hospitals not-for-profit institutions. Use the utility maximization model to explain the likely impact such a policy would have on the cost of producing hospital services. What would happen if instead a policy was instituted that reduced barriers to entry in the hospital sector and therefore made the market more competitive?
Knowledge Booster
Similar questions
- According to Gaynor, Laudicella, and Propper (2011), In the U.K., most hospitals are owned by the government, rather than privately held. In a setting where most hospitals are not owned by the government (such as in the U.S.), what effect do you predict that hospital mergers would have on the price of hospital care? Presumably, hospital mergers would lead to reduced competition and higher prices for any given type of care.arrow_forwardIn the days when the epidemic started, the price of the mask, which is normally $ 0.25 , has climbed up to $ 8 in the market. In this period, on average, a mask found buyers in the market for $ 4.Mask supply and demand functions:Qd = a - bPQs = -c + dPQd = QsLet's assume that it is. Here you can choose the numerical values of the a, b, c, d parameters to solve the problem. When making solutions, use them parametrically. a)Using the above information, plot the supply and demand functions for the mask market. Show consumer and producer surplus values on the chart. b)If the mask price is $ 6, write the consumer and producer residual value using the integral. (calculation is not required.) c)The Ministry of Health has announced the mask price as $ 1. According to this explanation, write the residual value of the producer and consumer using Integral. (calculation is not required)arrow_forwardwhat is the relationship between the financial well-being of the industry and availability of healthcare, in consideration of market and demand theories?arrow_forward
- When Rosenthal writes about how future payments for health care services depend on current charges and the incentive is for doctors to perpetually increase rates, what economic rule of the dysfunctional medical market is she referring to?arrow_forwardAccording to data from Yelp, more than 55 percent of the 132,500 businesses listed on the site that closed during the pandemic will remain shuttered permanently. Although government relief bought some companies time, businesses that are now closed will likely remain that way for the long term. Restaurants account for the greatest share of permanent and temporary closures, followed closely by retailers and then beauty salons and spas. “Businesses are needing to decide, ‘Do I renew my lease on my space for another year?’ It is really hard to make a one-year commitment to paying rent when businesses are closing down for the second time and there’s no end in sight to this virus,” said Michael Stepner, a postdoctoral researcher at Harvard University. “The longer these temporary closings go on, the more of them will turn permanent.” States that depend heavily on tourism like Hawaii and Nevada have experienced the most closures per capita. As businesses close across the country, it becomes…arrow_forwardUsing the appropriate graphs and terminology, explain why a city with 30,000 people is likely to have one hospital but 70 housecleaning service companies.arrow_forward
- Use supply and demand concepts to explain why the American Medical Association finds it beneficial to require more strict standards for entrance to medical schoolsarrow_forward"If the legal standard of care in a negligence rule is necessarily vague, the court should set it below the level of efficient precaution." Explain the economic argument in favor of this proposition.arrow_forwardSuppose a company has invented and patented a new effective drug to treat hay fever. The marginal cost of producing the drug is: MC = $4 . Without being covered in any insurance plan, the market demand is as follows: Qd = 800 -40P a. Suppose the drug is covered by a public health insurance plan with a co-insurance rate of 25% and everyone is eligible. What is the market demand under this insurance policy? What price should the company charge and what is the equilibrium quantity? a. Suppose now the public health insurer introduces the payment limit of $7.5 per unit of the drug; that is, the co-insurance rate of 25% applies if P less than or equal 10 (P<= 10), but the insurance only pays $7.5 per unit if P is greater than 10 P>10). Derive the new market demand. Under this new market demand, what price should the firm charge? Justify your answer.arrow_forward
- True or False. There is no such thing as “too much competition” in the private hospital market. Be sure to justify your answer.arrow_forward(0) Suppose a hospital has 500 beds. It faces a demand curve x= 1200-2p, where p is the price of a bed day and x is the number of patient days of care demand. The fixed cost of adding a new bed is $150 and the total housekeeping cost is given by C=(B/3.5)^2, where B is the total number of beds. a. Suppose the hospital's market price is fixed at $250/bed day. What is the net marginal revenue to this hospital from an increase of one additional bed? How do I solve this using no calc? Just algebra.arrow_forwardAccording to Gaynor, Laudicella, and Propper (2011), Can you think of reasons why hospital mergers might lead to improvements in the quality of care for a given level of inputs (which is one measure of hospital productivity)? Learning by doing may be facilitated by hospital mergers. Large hospitals can achieve more specialization and consequently their costs of care may be lower.arrow_forward
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