Explain How Will Different Supply Elasticities Affect Total Medical Expenditures
CHAPTER 5 REVIEW QUESTIONS (# 1-5)
1. With an increase in demand for medical services, how will different supply elasticities affect total medical expenditures?
An increase in demand will affect prices and quantity of services differently because it depends on the elasticity of supply. When supply is relatively elastic, increase in demand will be accompanied by a price increase, but it would be much less if supply were inelastic. Under elastic supply conditions, a much greater increase in services provided will occur. When supply is relatively inelastic, demand will result in larger price increases and small output increases.
(Answer found on Pg. 110)
2. Assume that the price of a specific input (e.g., registered nurses) was subsidized. …show more content…
This is because they can produce the same quantity of services at a lower price or a greater quantity of services at the same price. Some institutions use more of the subsidized input more than others; therefore, the supply subsidy’s affect would be different for each type of institution. The overall affect on the final price and quantity of medical services depends on how much of an increase in the input occurs as a result of that supply subsidy, how much of a decrease in the price of an input occurs, how much of that subsidized input is used in the production of medical care, and other factors. (Answer found on Pg. …show more content…
The institutional markets are affected because there will be an increase in the demand for nurses and not enough nurses to supply the increasing demand. This can influence the delivery of health care and affect patient care. The effect on the educational markets is that there would be a decrease in the number of graduates in the educational market. Nurses will experience an increase in demand for their services. Within the manpower markets, the employing institution’s demand for the nursing profession will affect wages and number of health professionals that are
1. With an increase in demand for medical services, how will different supply elasticities affect total medical expenditures?
An increase in demand will affect prices and quantity of services differently because it depends on the elasticity of supply. When supply is relatively elastic, increase in demand will be accompanied by a price increase, but it would be much less if supply were inelastic. Under elastic supply conditions, a much greater increase in services provided will occur. When supply is relatively inelastic, demand will result in larger price increases and small output increases.
(Answer found on Pg. 110)
2. Assume that the price of a specific input (e.g., registered nurses) was subsidized. …show more content…
This is because they can produce the same quantity of services at a lower price or a greater quantity of services at the same price. Some institutions use more of the subsidized input more than others; therefore, the supply subsidy’s affect would be different for each type of institution. The overall affect on the final price and quantity of medical services depends on how much of an increase in the input occurs as a result of that supply subsidy, how much of a decrease in the price of an input occurs, how much of that subsidized input is used in the production of medical care, and other factors. (Answer found on Pg. …show more content…
The institutional markets are affected because there will be an increase in the demand for nurses and not enough nurses to supply the increasing demand. This can influence the delivery of health care and affect patient care. The effect on the educational markets is that there would be a decrease in the number of graduates in the educational market. Nurses will experience an increase in demand for their services. Within the manpower markets, the employing institution’s demand for the nursing profession will affect wages and number of health professionals that are