With an increase in demand for medical care, how will different elasticity of supply affect total medical expenditures?
With an increase in demand for medical care, how will different elasticity of supply affect total medical expenditures?
Homework Answers
Ans) An increase in the price of health care services will increase spending on health care i.e total medical expenditure because demand is price inelastic
- Estimates of the price elasticity of health care are about to or quite inelastic.
- As such, an increase in the price will reduce quantity demanded by about one fifth as much in percentage terms. Accordingly, total spending will increase.
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With an increase in demand for medical care, how will different elasticity of supply affect total medical expenditures?
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