EBK ECONOMICS FOR TODAY
9th Edition
ISBN: 8220101414250
Author: Tucker
Publisher: Cengage Learning US
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Chapter P1, Problem 3KC
To determine
The important step when building a model.
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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.
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