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EBK MANAGERIAL ECONOMICS
4th Edition
ISBN: 9781305483170
Author: FROEB
Publisher: YUZU
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Chapter 16, Problem 16.4IP
To determine
Bankruptcy and the city bargaining power.
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According to Lee et al. (2009), the incremental cost-effectiveness ratio comparing the current dialysis treatment to the next least cost dialysis treatment is $61,294 per life year and $129,090 per QALY. Can you account for the different estimates?
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.
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The hospital is forced to increase its price for services by 2 percent.
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