You are employed as an economic consultant to the regional planning office of a large metropolitan area, and your task is to estimate the demand for hospital services in the area. Your estimates indicate that the own-price elasticity of demand equals 0.25, the income elasticity of demand equals 0.45, the cross-price elasticity of demand for hospital services with respect to the price of nursing home services equals 0.1, and the elasticity of travel time equals −0.37. Use this information to project the impact of the following changes on the demand for hospital services. Average travel time to the hospital diminishes by 5 percent due to overall improvements in the public transportation system. The price of nursing home care decreases by 10 percent. Average real income decreases by 10 percent. The hospital is forced to increase its price for services by 2 percent.
You are employed as an economic consultant to the regional planning office of a large metropolitan area, and your task is to estimate the demand for hospital services in the area. Your estimates indicate that the own-price elasticity of demand equals 0.25, the income elasticity of demand equals 0.45, the cross-price elasticity of demand for hospital services with respect to the price of nursing home services equals 0.1, and the elasticity of travel time equals −0.37. Use this information to project the impact of the following changes on the demand for hospital services. Average travel time to the hospital diminishes by 5 percent due to overall improvements in the public transportation system. The price of nursing home care decreases by 10 percent. Average real income decreases by 10 percent. The hospital is forced to increase its price for services by 2 percent.
Chapter11: The Market For Pharmaceuticals
Section: Chapter Questions
Problem 1QAP
Related questions
Question
You are employed as an economic consultant to the regional planning office of a large metropolitan area, and your task is to estimate the demand for hospital services in the area. Your estimates indicate that the own-price elasticity of demand equals 0.25, the income elasticity of demand equals 0.45, the cross-price elasticity of demand for hospital services with respect to the price of nursing home services equals 0.1, and the elasticity of travel time equals −0.37. Use this information to project the impact of the following changes on the demand for hospital services.
-
- Average travel time to the hospital diminishes by 5 percent due to overall improvements in the public transportation system.
- The price of nursing home care decreases by 10 percent.
- Average real income decreases by 10 percent.
- The hospital is forced to increase its price for services by 2 percent.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
