Suppose that the price elasticity for hip replacement surgeries is 0.4. Further suppose that hip replacement surgeries are originally not covered by health insurance and that at a price of $50,000 each, 10,000 such surgeries are demanded each year. Instructions: In part a, round your answers to 1 decimal place. In part b, enter your answers as a whole number. a. Suppose that health insurance begins to cover hip replacement surgeries and that everyone interested in getting a hip replacement has health insurance. If insurance covers 70 percent of the cost of the surgery, by what percentage would you expect the quantity demanded of hip replacements to increase? (Hint. Do not bother to calculate the percentage changes using the midpoint formula. If insurance covers 70 percent of the bill, just assume that the price paid by consumers falls 70 percent.) percent
Suppose that the price elasticity for hip replacement surgeries is 0.4. Further suppose that hip replacement surgeries are originally not covered by health insurance and that at a price of $50,000 each, 10,000 such surgeries are demanded each year. Instructions: In part a, round your answers to 1 decimal place. In part b, enter your answers as a whole number. a. Suppose that health insurance begins to cover hip replacement surgeries and that everyone interested in getting a hip replacement has health insurance. If insurance covers 70 percent of the cost of the surgery, by what percentage would you expect the quantity demanded of hip replacements to increase? (Hint. Do not bother to calculate the percentage changes using the midpoint formula. If insurance covers 70 percent of the bill, just assume that the price paid by consumers falls 70 percent.) percent
Chapter9: The Physicians’ Services Market
Section: Chapter Questions
Problem 1QAP
Related questions
Question
Transcribed Image Text:Suppose that the price elasticity for hip replacement surgeries is 0.4. Further suppose that hip replacement surgeries are originally not
covered by health insurance and that at a price of $50,000 each, 10,000 such surgeries are demanded each year.
Instructions: In part a, round your answers to 1 decimal place. In part b, enter your answers as a whole number.
a. Suppose that health insurance begins to cover hip replacement surgeries and that everyone interested in getting a hip replacement
has health insurance. If insurance covers 70 percent of the cost of the surgery, by what percentage would you expect the quantity
demanded of hip replacements to increase? (Hint. Do not bother to calculate the percentage changes using the midpoint formula. If
insurance covers 70 percent of the bill, just assume that the price paid by consumers falls 70 percent.)
percent
What if insurance covered 95 percent of the price?
percent
b. Suppose that with insurance companies covering 95 percent of the price, the increase in demand leads to a jump in the price per
hip surgery from $50,000 to $80,000. How much will each insured patient now pay for a hip replacement surgery?
$
Compared to the original situation, where hip replacements cost $50,000 each but people had no insurance to help subsidize the
cost, will the quantity demanded increase or decrease?
Transcribed Image Text:suppose that health insurance begins to cover nip replacement surgeries and that everyone interested in getting a nip replacement
as health insurance. If insurance covers 70 percent of the cost of the surgery, by what percentage would you expect the quantity
emanded of hip replacements to increase? (Hint: Do not bother to calculate the percentage changes using the midpoint formula. If
nsurance covers 70 percent of the bill, just assume that the price paid by consumers falls 70 percent.)
percent
What if insurance covered 95 percent of the price?
$
percent
D. Suppose that with insurance companies covering 95 percent of the price, the increase in demand leads to a jump in the price per
hip surgery from $50,000 to $80,000. How much will each insured patient now pay for a hip replacement surgery?
Compared to the original situation, where hip replacements cost $50,000 each but people had no insurance to help subsidize the
cost, will the quantity demanded increase or decrease?
(Click to select)
By how much?
surgeries
Broy
22 of 25
Next
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you