Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 1, Problem 10Q
To determine
Causation as a concept using an example.
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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.
The commissioner of health is concerned about the increasing number of reported cases of preventable childhood diseases, such as polio and rubella. It appears that a growing number of young children are not being vaccinated against childhood diseases as they should be. Two proposals to address the problem are sitting on the commissioner’s desk. The programs have equal costs, but the commissioner has funding for only one. The first proposal involves providing free vaccinations at clinics around the country. The benefits from a free vaccination program are likely to be experienced immediately in terms of a drop in the number of reported cases of illness. The second program calls for educating young married couples about the benefits of vaccination. The benefits in this instance will not be felt for some years. The commissioner wants to use cost-benefit analysis to determine which proposal should be implemented. Explain to the commissioner the critical role the discount rate plays in…
Which of the following Nobel Prize Winners’ primary work in investments was consistent with market efficiency? Mark each “Yes” or “No.” You can search the internet for more information about their Nobel Prizes.
Eugene Fama Harry Markowitz William Sharpe Robert Shiller
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Microeconomics (2nd Edition) (Pearson Series in Economics)
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