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Hen 368 lecture 7 the demand for medical care
- 1. Health Economics Lecture 7 The Demand for Medical Care
- 2. SPECIAL This week only Gall Blatter surgery 50% percent off
- 3. Derived Demand Getting health by buying medical care
- 4. Normal Market Medical Market Planned Yes No Know Price Yes No Guarantee Yes No Equal Information Yes No
- 5. Health Medical Costs Large Gain Diminishing Marginal Utility Health and Medical Costs Small Gain
- 6. The Law of Demand 0 10 20 30 40 50 60 70 80 90 100 0 1 2 3 4 5 6 7 8 9 10 Price Quantity
- 7. The Law of Demand 0 10 20 30 40 50 60 70 80 90 100 0 1 2 3 4 5 6 7 8 9 10 Price Quantity
- 8. Law of Demand When price falls quantity demand increases When price increases quantity demanded falls.
- 9. Demand for Medical Care out-of-pocket price income time costs prices of substitutes and compliments tastes and preferences physical and mental profile state of health quality of care
- 11. Income Higher income tends to demand more medical care
- 12. Time Costs Time to visit medical provider and the opportunity costs
- 13. Prices of Substitutes and Compliments OR AND
- 14. Tastes and Preferences Marital Status - less Education - ? Lifestyle - risky
- 15. Physical and Mental Profile Gender - women more Race/Ethnicity Age - older more
- 16. State of Health Sicker - More Unhealthy - More
- 17. Quality of Care Hard to measure nice office perception is more important than reality
- 18. Market Demand Intensive Margin Do you buy more or less when the price changes Extensive Margin Do more or fewer people buy when the price changes
- 19. Elasticity A measure of how much one economic variable responds to changes in another economic variable
- 20. Elasticity Percentage Change in Quantity Demanded Percentage Change in Price
- 23. Price Elasticity of Demand % % QD P Percentage Change in Quantity Demanded Percentage Change in Price
- 24. Price Elasticity of Demand 1 ElasticInelastic <1 >1 1. Calculate Elasticity 2.Take AbsoluteValue 3. Compare to benchmark of 1
- 25. What determines Price Elasticity of Demand?
- 26. Close Substitutes Passage of Time Luxuries vs. Necessities Definition of Market Share of Budget
- 28. Passage of Time More Time More Elastic
- 29. Luxuries vs. Necessities Elastic Inelastic
- 30. Share of the Budget ElasticInelastic Small Large
- 31. Price Elasticity of Demand % QD % P
- 32. $0 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 1 2 3 4 5 6 7 8 9 10 Gallons - Gasoline Price %QD %P (4-5)÷5 (6-3)÷3 -20% +100% .2
- 33. Close Substitutes Passage of Time Luxuries vs. Necessities Definition of Market Share of Budget
- 34. % QD % I Income Elasticity of Demand Normal, Inferior, or Luxury?
- 35. Income Elasticity of Demand 0 NormalInferior <0 >1 1 Luxury 0 to 1