Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 2, Problem 2E
To determine
The acceptability of the given statement.
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Students have asked these similar questions
Designers of National Health Insurance proposals have been greatly concerned with
a number of questions. What would happen to the quantity of various services
demanded if prices to patients were cut to zero or were cut 75 percent? Knowledge
of elasticities is crucial to answering these questions. In a recent study of the
demand for dental care, Manning and Phelps estimated price elasticities separately
for adult females, adult males, and children. Their results were as follows:
a.
b.
C.
d.
Service
Cleanings
Fillings
Extractions
Examinations
Dentures
Crowns
Orthodontia
Adult Females
.79
.58
-.21
.56
.59
-.54
Adult Males
.14
.73
1.51
.03
-2.20
-.89
Children
1.34
.95
.97
.59
1.70
.08
Source: W.G. Manning, Jr. and C.E. Phelps, "The Demand for Dental Care,"
The Bell Journal of Economics, Autumn 1979, pp. 503-525.
If prices to all patients were cut, would expenditure on examinations rise or
fall? Why? {Note: Negative entries in the table refer to Giffen goods.}
For which service would a…
Demand for medical services is price inelastic (Absolute value of price elasticity of demand is less than 1 and greater than zero). Medical services are different from most other goods and services in that the person who determines the demand (the patient) is not the person who makes the payment (payment is made by the insurance company). How does this affect the price elasticity of demand for medical services (increase it or decrease it)? You may assume that this question only refers to people who have health insurance. Ignore co-payments and deductibles and any other out-of-pocket expenses. Please give an explanation.
Indicate whether the statement is true or false, and justify your answer.Unlike the usual measure of elasticity, an arc elasticity can be calculated from just one price–quantity data point.
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