Asked by OfficialAuzzi Clitnovici on Apr 26, 2024
Verified
Other things equal, and given that the elasticity of demand for health care is 0.2, a 10 percent increase in the price of health care in the United States will reduce the quantity of health care demanded by about
A) 1 percent.
B) 2 percent.
C) 5 percent.
D) 20 percent.
Elasticity Of Demand
An assessment showing the influence of price adjustments on the quantity demanded of a product.
Price Increase
A rise in the cost of goods or services, often measured as a percentage of the previous price.
- Grasp the essential and monetary challenges confronting the U.S. health care system, highlighting overuse and the effects of changing prices on demand levels.
Verified Answer
JS
Jahed ShibloApr 28, 2024
Final Answer :
B
Explanation :
The elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. Given an elasticity of 0.2 and a 10 percent increase in price, the quantity demanded would decrease by 2 percent (0.2 * 10%).
Learning Objectives
- Grasp the essential and monetary challenges confronting the U.S. health care system, highlighting overuse and the effects of changing prices on demand levels.