Last year in a particular market area it is found that 1000 people have their vision checked eachyear. The average price of the exam is $50.This year for the first time insurance companies will pay for half the price of the exam, with thepatient paying the other half.Demand for eye exams is inelastic, with an elasticity coefficient of 0.2 between a price of $25and $50.How many people will now have their vision checked? Show your work.

Elasticity coefficient is the percentage changes in one variable divided by percentage change in…

Answered: Last year in a particular market area…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Outpatient Price per Region Tokyo Visits Visit 1 per month 25 Yen Hokkaido 1.5 per month 10 Yen What is the arc price elasticity of demand for health care in Japan based on these data? a. c. Using your estimated elasticity from part a, what would the demand for health care be if the price in Tokyo were raised to 30 Yen per visit? d. Using your estimated elasticity from part a, what would the demand in Hokkaido be if the price were lowered to 5 Yen per visit?
What is the main reason why physicians believe they are not fairly compensated? Increasing government control Increasing cost of medical malpractice insurance Decreasing insurance reimbursement Incurring large debt in training
A consumer’s demand for a medical service is as follows: Q = 100 - PP where PP is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, a 50% coinsurance plan, and a copayment plan with a $25 copay. Assume this service has a list price of PL = $70. Calculate Q under each insurance plan. Calculate the amount of social loss under each insurance plan. Derive a general expression for social loss as a function of x and PL, where x is the copay amount under a copayment plan. For simplicity’s sake, assume x < PL. Derive a general expression for social loss as a function of y and PL, where y is the coinsurance rate.
Suppose the government sets the maximum price for a normal doctor's visit at $20, but the current market price is $40. As a result of this government action, doctors will see: more patients. the same number of patients. fewer patients.
Price ($) 100 SO 20 $1,600 $800 Demand $12,000 $1,200 Demand (under coinsurance) 100 120 Supply In the above figure, the decreased coinsurance rate leads to deadweight loss of ___ Quantity of care (visits)
How do fee-for-service and capitation payment systems affect the amount of medical care the patient receives relative to the optimum amount that would be provided by the “perfect” agent? Under which system we expect to see more supplier-induced demand?
Based on the data presented in the table below estimate elasticity of demand for two price changes: a) price increase from $3 to $9 per hour; and b) price decrease from $9 to $3 per hour. Make sure to use the midpoint formula. Price Per Hour of Therapy Demand for Therapy 0 16 1 15 2 14 3 13 4 12 5 11 6 10 7 9 8 8 9 7 10 6 11 5 12 4 13 3 14 2 15 1 16 0
Price controls decrease the innovation rate for drugs but make existing drugs more affordable. True False
What does income elasticity of demand mean for insurance companies and medical providers for making a decision?
Explain the factors that may cause shortages of physicians in rural areas. Explain what types of policies might encourage physicians to move to rural areas and reduce the shortage.
The proportion of an insurance company’s premium income spent on provision of treatments is called the formulary. capitation per member per month. point of service. medical loss ratio. total premium.
6. The demand for the doctor's visits, Q, is the following: Q= 5 – 0.04P. The market price of a visit, equals the MC of $100. What is the equilibrium number of visits? What if the consumer purchases full-coverage (no coinsurance) health insurance and the demand stays the same. How many doctor visits would the patient consume? Calculate the deadweight loss or moral hazard cost as a result of the insurance coverage. Remember, DWL is there if units for which MB>MC are not produced, or if units for which MC>MB are produced.

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