Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 7, Problem 7.4.8PA
Subpart (a):
To determine
Restraining the growth of Medicare spending.
Subpart (b):
To determine
Restraining the growth of Medicare spending.
Subpart (c):
To determine
Restraining the growth of Medicare spending.
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Demand falls by 5 percent for every 10 percent increase in price health care services. How much is the won price elasticity of demand for health care?
What would happen if, in order to provide lower cost healthcare, the government decided to set a price ceiling (Pmax) in the health insurance market?
For every 10 percent increase in price of health care services, demand falls by 3 percent. How much is the own price elasticity of demand for health care?
0.3
3.33
-3.33
-0.3
Chapter 7 Solutions
Microeconomics (7th Edition)
Ch. 7 - Prob. 7.1.1RQCh. 7 - Prob. 7.1.2RQCh. 7 - Prob. 7.1.3RQCh. 7 - Prob. 7.1.4PACh. 7 - Prob. 7.1.5PACh. 7 - Prob. 7.1.6PACh. 7 - Prob. 7.2.1RQCh. 7 - Prob. 7.2.2RQCh. 7 - Prob. 7.2.3RQCh. 7 - Prob. 7.2.4RQ
Ch. 7 - Prob. 7.2.5PACh. 7 - Prob. 7.2.6PACh. 7 - Prob. 7.2.7PACh. 7 - Prob. 7.2.8PACh. 7 - Prob. 7.2.9PACh. 7 - Prob. 7.3.1RQCh. 7 - Prob. 7.3.2RQCh. 7 - Prob. 7.3.3RQCh. 7 - Prob. 7.3.4RQCh. 7 - Prob. 7.3.5PACh. 7 - Prob. 7.3.6PACh. 7 - Prob. 7.3.7PACh. 7 - Prob. 7.3.8PACh. 7 - Prob. 7.3.9PACh. 7 - Prob. 7.3.10PACh. 7 - Prob. 7.3.11PACh. 7 - Prob. 7.3.12PACh. 7 - Prob. 7.3.13PACh. 7 - Prob. 7.3.14PACh. 7 - Prob. 7.3.15PACh. 7 - Prob. 7.4.1RQCh. 7 - Prob. 7.4.2RQCh. 7 - Prob. 7.4.3RQCh. 7 - Prob. 7.4.4RQCh. 7 - Prob. 7.4.5RQCh. 7 - Prob. 7.4.6PACh. 7 - Prob. 7.4.7PACh. 7 - Prob. 7.4.8PACh. 7 - Prob. 7.4.9PACh. 7 - Prob. 7.4.10PACh. 7 - Prob. 7.4.11PACh. 7 - Prob. 7.4.12PACh. 7 - Prob. 7.4.13PACh. 7 - Prob. 7.4.14PACh. 7 - Prob. 7.1CTE
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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…arrow_forwardDemand 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 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
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