Low Price Elasticity: A Case Study Of Elasticity

ECONOMICS CIA-3

NAME- AISHWARYA DUTTASHRAMA CLASS- 1EMS REGISTER NO. - 1540817

TOPIC- CASE STUDY ON ELASTICITY OF DEMAND AND SUPPLY.

Elasticity is the term which economists use to measure the changes. It measures the degree of responsive of quantity demanded or quantity supplied due the various determinants of demand and supply. The essential idea is that elasticity measures how sensitive we are to changes in price. The price elasticity of demand is measured as the percentage change in quantity demanded divided by the percentage change in price, and the price elasticity of supply is measured as the

The type and kind of health care services offered vary widely and we assume that the elasticity of demand for the particular services types would vary as well. There might be a difference in demand for inpatient services, outpatient services, acute and preventive care, lab work, office visits, pharmaceuticals, x-rays, and a variety of other services. Most economist believe that demand for health care is quite inelastic because if a person is sick they won’t be price sensitive. There are exceptions though surgeries like plastic surgery which are elective and purchasing eyeglasses. The price elasticity of medical service is defined as the percentage change in quantity of medical care demanded divided by the percentage change in price of the same commodity. Most economist believe that the price elasticity for health care is between 0 and -1. This means that if prices increase by 20%, the demand for medical services decreases, but by less than 20%. This means that medical goods are

Income elasticity measures the percentage change in the demand for medical services as income increases. If the income elasticity is greater than 1, assuming medical services to be a luxury good. This means that as people get richer, they want more of the good. Estimates of income elasticity range from 0 to about 1.6 according to reports which makes it difficult to assess whether it is elastic or inelastic.
All though the insured consumers may cut back on their overall health spending by 2 percent in response to a 10 percent increase in the price of health care. Price induced changes in demand have been attributed more to changes in the probability of using any care than to changes in the amount of care used once it is accessed. Low-income consumers are more sensitive to changes in the price of care. Consequently, they may be more likely to experience adverse consequences from higher cost. With respect to different types of health care services.
IS HEALTH CARE A LUXURY OR NECESSITY