Define cross-price elasticity of demand. What is the meaning (in words) of a cross-price elasticity of demand of +6.5?
HEALTH ECONOMICS – BRIEFLY ASNWER
An Overview of Medical Care Sector and Demand for Medical Care
Questions for Discussion
With an increase in demand for medical care, how will different supply elasticities
affect total medical expenditures.
Assume that the price of a specific input (e.g., registered nurses) was subsidized.
Trace the effect of such a policy on the market for hospital services.
Based on demographic projections, it is estimated that fewer female high school
graduates will be available to pursue a nursing career. Trace this demographic
effect on the market for medical care.
Show how an increase in the quantity of medical care consumed can be achieved
through either a demand or supply subsidy. What are the advantages and
disadvantages of general versus targeted demand and supply subsidies.
5. If the price of medical care were set to zero for everyone, would individual
demands for medical care still differ? Under what conditions would you favor a
“negative” price for medical care?. Negative pricing is when supplier pays the consumer to use the product/service. For example, a seller offers cash or coupon to a local restaurant if consumers agrees to try the product or if health authorities offer gifts or cash cards if an indigent teenage expecting mother shows up for prenatal care.
6. Why do some economists tend to reject the concept of need as the sole determinant of use
in favor of the concept of the demand for medical care. (Need is determined by experts such as number of hospital beds for every hundred thousand population or number of students per primary school class. Demand is determined by ‘wants’ of consumers who are willing and able to pay for goods/services they like to consumer.)
7.What variables should be included in a comprehensive measure of the price a person
pays to consume medical care
8.Define cross-price elasticity of demand. What is the meaning (in words) of a
cross-price elasticity of demand of +6.5?
9.Discuss the determinants of the demand for medical care. That is, develop demand function for medical care.
10.How would you use the results of a demand analysis to suggest recommendations to
increase the utilization of ambulatory medical care by those with low-incomes?
11.What factors might cause physicians to experience an increase in the number of
requests for annual physical examinations even though they do not change their
fees for this service?
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