There is a debate about whether sterile hypodermic needles should be passed out free of charge in cities with high illegal druguse. Proponents argue that doing so will reduce the incidence of diseases, such as HIV/AIDS, that are often spread by needlesharing among drug users. Opponents believe that doing so will encourage more drug use by reducing the risks of this behavior.As an economist asked to assess the policy, you must know the following: (i) how responsive the spread of diseases likeHIV/AIDS is to the price of sterile needles and (ii) how responsive drug use is to the price of sterile needles. Assuming that youknow these two things, use the concepts of price elasticity of demand for sterile needles and the cross-price elasticity betweendrugs and sterile needles to answer the following questions.Which of the following would have to be true for this policy to be beneficial to cities?0The price elasticity of demand for sterile needles is relatively elastic.The cross-price elasticity of demand between drugs and sterile needles indicates they are weakly complementary.The cross-price elasticity of demand between drugs and sterile needles indicates they are strong substitutes.The price elasticity of demand for sterile needles is relatively inelastic.Incorrect

The price elasticity of demand is a measure of how responsive the quantity demanded of a good or…

Which of the following would have to be true for this policy to be beneficial to cities? The price elasticity of demand for sterile needles is relatively elastic. The cross-price elasticity of demand between drugs and sterile needles indicates they are weakly complementary. The cross-price elasticity of demand between drugs and sterile needles indicates they are strong substitutes. The price elasticity of demand for sterile needles is relatively inelastic.

Which of the following would have to be true for this policy to be beneficial to cities? The price elasticity of demand for sterile needles is relatively elastic. The cross-price elasticity of demand between drugs and sterile needles indicates they are weakly complementary. The cross-price elasticity of demand between drugs and sterile needles indicates they are strong substitutes. The price elasticity of demand for sterile needles is relatively inelastic.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter9: The Physicians’ Services Market

Section: Chapter Questions

Problem 1QAP

See similar textbooks

Similar questions

In a hypothetical situation, Government of Pakistan wants to put a curb on cigarette smoking through economic policy: Studies indicate that the price elasticity of demand for cigarettes is about 0.5. If a pack of cigarettes currently costs Rs.200 and the government wants to reduce smoking by 22 percent, by how much should it increase the price? If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now? Studies also find that teenagers have a higher price elasticity of demand than adults. Why might this be true?
Preventative care refers to care taken to prevent future diseases rather than to treat current ones. Compared to emergency room care, preventative care is rarely urgent, and benefits can be difficult to measure-if you had the flu vaccine this year but did not catch the flu, it is difficult for an individual to tell if that was because of the shot or assiduous hand washing. Given this description, we would expect the price of preventative care to be relatively price elastic compared to emergency room care. less more
In a study, by economist Paul Gertler and Jacques van der Gaag, it was found that the price elasticity of demand for hospital services in Peru was 0.67 among poor households and 0.29 among wealthy households. What will be the impact on poor and wealthy households of a government decision to increase the price of hospital services by 10%.
Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.” Do you agree or disagree with this view?
Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.”Do you agree or disagree with this view? Disagree - the reduction in demand will push the equilibrium price below its original level. Disagree - this confuses a change in demand with a change in quantity demanded. Agree - the price increase will ultimately leave cigarette consumption unchanged. Disagree - higher cigarette prices will actually increase the demand for cigarettes.
Florida, like several other states, has passed a law that prohibits “price gouging” immediately before, during, or after the declaration of a state of emergency. Price gouging is defined as “selling necessary commodities such as food, gas, ice, oil, and lumber at a price that grossly exceeds the average selling price for the 30 days prior to the emergency.” Many consumers attempt to stock up on emergency supplies, such as bottled water, immediately before and after a hurricane or other natural disaster hits an area. Also, many supply shipments to retailers are interrupted during a natural disaster. Assuming that the law is strictly enforced, what are the economic effects of the price gouging statute? Explain carefully.
Suppose that you observe that when the price of a particular vaccine falls by 4%, the quantity purchased____ by 2%. This implies that this vaccine is price in demand and that the price elasticity of demand is equal to ______ falls; elastic; 2 falls; inelastic; 0.5 rises; elastic; 2 rises; inelastic; 0.5
Consider the measurement of prices in the medical sector, where there is rapid innovation. Consider the case of a medical check-up for pregnant women. Assume that this service is privately provided. Suppose that a new ultrasound method is introduced. In the first year that this new method is available, half of doctors offer the new method and half offer the old method. Pregnant women frequent both doctors. A checkup using the new method costs 10% more than a check-up using the old one. 1. In percentage terms, how much of a quality increase does the new method represent compared to the old method? Now suppose that in addition, in the first year the new method is offered, the price of check- ups with the new method is 15% higher than the price of check-ups in the previous year (when everyone used the old method). 2. How much of the higher price of checkups using the new method reflects a true price increase and how much represents a quality increase? How much higher is the quality-…
Besides its devastating health consequences, COVID-19 also caused significant economic hardships for many families around the world. For instance, https://www.cbpp.org/research/poverty-and- inequality/tracking-the-covid-19-recessions-effects-on-food-housing-and explores some of the trends in the United States. Assuming that incomes fell during the COVID recession for the customers of an inferior good, which of the following would we expect to happen to that good’s price and quantity during this time? a. Prices increase and quantities decrease b. Prices decrease and quantities decrease c. Prices increase and quantities increase d. Prices decrease and quantities increase
Luchansky and Monks (2009) estimate that the U.S. demand curve for ethanol is Qequals=p Superscript negative 0.504 Baseline p Subscript g Superscript 1.269 Baseline v Superscript 2.226p−0.504p1.269gv2.226, where Q is the quantity of ethanol, p is the price of ethanol, p Subscript gpg is the price of gasoline, and v is the number of registered vehicles. What is the elasticity of demand for ethanol? Part 2 The elasticity of demand is the percentage change in quantity divided by the percentage change in price:
Case study “PRICE CUTS FOR MEDICINES: CHEMISTS AT RISK AS PRICES ARE SLASHED” and answer the following questions: PRICE CUTS FOR MEDICINES: CHEMISTS AT RISK AS PRICES ARE SLASHED by Nigel Hawkes, health editor.Big price cuts on a wide range of medicines and vitamins were promised by the supermarket chains yesterday as 30 years of price-fixing were swept aside. Many popular products, including painkillers, cough medicines, indigestion tablets and nutritional supplements are being halved in price from last night, with reductions of between 20 and 40 per cent on many others. The Office of Fair Trading called it excellent news for consumers but the body representing small pharmacies said that many would close, threatening community services. The big supermarkets trumpeted ‘millions of pounds-worth of savings’ as they competed to offer the biggest reductions. At Asda, a packet of 16 regular Anadin will be 87p, instead of £1.75, and Nurofen tablets will cost £1.14 for 16, rather than £2.29.…
consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently cost $5 and the government wants to reduce smoking by 20%, it should increase the price by what %? If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be blank than the effect 3 months from now. Studies also find that teenagers have a higher price