UMUC HLSA711 Assignment 3 Question # 00601904 Subject: Education Due on: 06/03/2019 Posted On: 06/03/2019 04:18 AM Tutorials: 1 Rating: 4.8/5

HLSA 711:
Health Economics

Spring
2017

Lecture
Activity/Assignment 3

1.
After reading the chapter on demand theory, a
classmate turns to you and says, “I’m rather confused. According to economic
theory, people demand a good or service because it yields utility. This
obviously does not apply to medical services. Just last week I went to the
dentist and had a root canal, and you can’t tell me I received any utility or
satisfaction from that!” Explain to your classmate how utility analysis can be
used to explain why he went to the dentist.

2.
In your own words, explain what a fuzzy
demand curve is. Why does it exist? What are its implications?

3.
Define own-price
elasticity of demand, and explain how it is related to the demand curve.
Provide four reasons why the demand for medical services is likely to be
inelastic with respect to its price.

4.
You are employed as an economic consultant to
the regional planning office of a large metropolitan area, and your task is to
estimate the demand for hospital services in the area. Your estimates indicate
that the own-price elasticity of demand equals –0.25, the income elasticity of
demand equals 0.45, the cross-price elasticity demand for hospital services
with respect to the price of nursing home services equals –0.1, and the
elasticity of travel time equals –0.37. Use this information to project the
impact of the following changes on the demand for hospital services.

A.
Average travel time to the hospital
diminishes by 5 percent due to overall improvement in the public transportation
system.

B.
The price of nursing home care decreases by
10 percent.

C.
Average real income decrease by 10 percent.

D.
The hospital is forced to increase its price
for service by 2 percent.

5.
Suppose demand for good is given by where is the price of
good , Suppose is the price of
some other good , and is income. Assume that is currently
$5, is currently
$5, and is currently
$100.

a.
What is the elasticity of demand for good with respect to
the price of good at the current
situation?

b.
Suppose if increases to $10,
demand for good A would decrease to 20. What is the cross-price elasticity of
the demand for good with respect to
the price of good? What the relationship of good A and B?

c.
Suppose if Income (I) increase by $100,
demand for good A increase by 50 unites. What is the income elasticity of
demand for good ?

6.The table below shows results from the study of diabetic
patients discussed in Goldman and Smith (2002). Recall that three groups of
patients separated by education level were treated with one of two therapies
(conventional vs intensive). Their average hemoglobin A1c levels (also known as
glycosylated hemoglobin) before and after the experiment are reported. Note
that, as in golf, lower scores are better on the hemoglobin A1c test, which
measure how well the patient has kept blood glucose levels in control. Most
treatment regimens for diabetes are designed to keep hemoglobin A1c levels low.

Improvement in hemoglobin measurement for diabetics by
treatment regime and age.

Source:Goldman
and Smith (2002).

As the figure indicates, average hemoglobin A1c levels
deteriorated for patients in the control

group, but improved for patients in the treatment group.

a)
In all
three groups of conventional-therapy patients, glucose levels got worse. Which
of the conventional therapy groups had the biggest deterioration in average
glycosylated hemoglobin levels?

b)
Which
intensive-treatment group had the biggest improvement in average glycosylated
hemoglobin levels?

c)
For which
group of patients did the intensive-treatment intervention seem to have the
biggest effect compared to the conventional therapy? The smallest effect?

d)
What is
the implication of these results?

7. The table below shows data from Rich Edwards et al. (2005)
on the prevalence of various afflictions among female nurses who were born at
different weights. Hazard rate of coronary heart disease, stroke, and total
cardiovascular disease, compared to average birth rate cohort.

(a) Is it a coincidence that all nurses born at average birth
weight suffer from coronary heart disease, stroke, and all cardiovascular
disease at the exact same rate?

(b) Summarize the data in the figure in one or two concise
sentences.

(c)
What is
the implication of these results?