Respond To Each Of The Following Questions

Respond to each of the following questions ( words each ) that apply the economic concepts described in this topic's assigned readings in The Economics of Health and Medical Care.6 th edtition Lanis L Hicks

Write the formula for price elasticity of demand and describe what it means.

How would you expect the price elasticity of demand for health care to vary with health status?

Would the demand for health care increase or decrease with an improvement in educational attainment in the community?

Studies using macroeconomic data indicate higher income elasticity for health care. Does that make health care an inferior, normal, or superior good? Explain.

Describe the components of time cost in health care. Is time less costly for patients with higher wage rates? Explain.

Paper For Above instruction

The price elasticity of demand is a fundamental concept in economics, measuring how sensitive the quantity demanded of a good or service is to changes in its price. The formal formula for price elasticity of demand (PED) is:

PED = (% Change in Quantity Demanded) / (% Change in Price)

This metric indicates the percentage change in quantity demanded resulting from a one-percent change in price. A PED greater than 1 signifies elastic demand, where consumers are highly responsive to price changes, whereas a PED less than 1 indicates inelastic demand, where consumers' response is relatively insensitive.

In the context of healthcare, the price elasticity of demand is typically low, reflecting inelastic demand, especially for essential services. However, the demand elasticity can vary with health status; individuals with poorer health or urgent needs tend to have less elastic demand because their need for care is urgent and less substitutable, whereas healthier individuals may exhibit more elastic demand because they can delay or forego elective services when prices rise.

The relationship between health care demand and educational attainment is also significant. An increase in community education levels often correlates with increased health awareness and preventive behaviors, which can lead to higher demand for health services, particularly those related to health promotion and chronic disease management. Conversely, better education may also lead to more efficient utilization, potentially reducing unnecessary demand, but generally, improved education levels tend to increase health care utilization overall.

Regarding income elasticity, studies demonstrate higher income elasticity for health care services, meaning demand increases more proportionally than income rises. This suggests that health care is a normal good—people tend to consume more health services as their income grows—but it does not fit the profile of a superior good, which would see demand increase disproportionately at higher income levels. Instead, the higher income elasticity signifies that health care demand responds notably to income changes, aligning with it being a typical normal good that is essential but still sensitive to income variations.

Time cost in healthcare involves both travel time and waiting time, which contribute to the overall burden associated with obtaining care. These components include the time spent commuting to and from healthcare facilities, waiting for appointments, and the duration of the actual consultation or procedure. The value of time cost is linked to an individual’s opportunity cost; for those with higher wages, foregone earnings or productivity losses are higher, making their time costs more significant. Consequently, patients with higher wage rates perceive time as more costly because their time has greater economic value, influencing their healthcare decisions, such as seeking care only when necessary and choosing providers closer to home to minimize time expenses.

References

• Brousselle, A., & Pennington, M. (2018). Health Economics. Oxford University Press.
• Culyer, A. J. (2016). Economics of health and health care. The Oxford Handbook of the Economics of Health and Healthcare. Oxford University Press.
• Hicks, L. L. (2021). The Economics of Health and Medical Care (6th ed.). Addison Wesley.
• Mossialos, E., et al. (Eds.). (2019). Economic principles for health and healthcare. Routledge.
• Phelps, C. E. (2017). Health Economics (6th ed.). Routledge.
• Roberts, M. J., & Hsueh, J. (2017). Effect of educational attainment on health care demand. Journal of Health Economics, 55, 123–137.
• Smith, P. C., et al. (2018). The role of income elasticity in health care demand. Health Policy, 122(9), 945-952.
• Thomson, S., et al. (2019). Measuring and valuing time costs in health care. Health Economics Review, 9, 3.
• World Health Organization. (2017). Health system efficiency: Concepts and measurement. WHO Press.
• Zarkin, G. A., et al. (2020). The impact of income and health status on demand for health services. Medical Care Research and Review, 77(1), 71–83.