Chapter 8, Problem 17E

Demand 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?

Bonus Question. Suppose that a consumer makes V0 physician visits each year at a price of P0. If the price elasticity is -0.4, what will happen to the number of visits if the price increases by 15 percent?  What will happen to total physician expenditures?  Explain your answers.  Hint: take into account that physician expenditures is the same as a physician’s practice revenue.  Also, consider the relationship of elasticity and revenues.

Which of the following types of healthcare services has demonstrated the greatest variability in demand over time? A. Inpatient discharges B. Physician visits C. Long-termcare services D. Cosmetic surgery

Comment on the elasticity of demand for medicine

Discuss what is known about price elasticities of demand for various health care services.   Needs to discuss acute, chronic, well, dentistry; hospital, ambulatory

Suppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%. Suppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%. a. fall; 0.3% b. rise; 0.9% c. rise; 0.3% d. fall; 0.9%

Price elasticity of demand for nursing home services

With the help of appropriate diagrams, explain how each of these situations will affect the demand curve for inpatients service at a hospital in a large city: 1. The hospital relocates from the center of the city where a majority of the people live, to a suburb.

a. What is the arc price elasticity of demand for healthcare consumers in Japan using only this data? b. Using your estimated elasticity, what would the demand for health care be if the price in tokyo were raised to 30 per visit? What would the demand in Hokkaido be if the price were lowered to 5 per visit? Region Outpatient visits Price/ visit Tokyo 1.25/ month 20Y Hokkaido 1.5/ month 10Y