I'm stuck with these questions:
(Lesson: Elasticity Introduction)
-Emergency room health care tends to have a demand curve that is very steeply sloped, while elective surgery does not. Why? Also, health care insurance and vacation spending tend to have a negative cross price elasticity of demand for many people. Why?
-The cross-price elasticity of demand between fishing line and fishing lures tends to be negative. This means that:
A- Line and lures are complements of one another.
B- Line and lures are substitutes for one another.
C- Line and lures are inferior goods.
D- Line and lures are normal goods.
E- Line and lures are necessities.
(Consumer and Producer Surplus Quiz)
- Suppose the University of Oklahoma decides to alter its tuition schedule by separating its students based on how many credit hours they have accumulated. Students with fewer than 15 credit hours get a 13% reduction in tuition while students with 45-90 and more than 90 credit hours face an increase in tuition of 22 and 71%, respectively. Fully explain whether this pricing strategy is rooted in a sound understanding of the price elasticity of demand, or not.
- The state of California recently considered passing a tax on the services of doctors in that state in order to raise revenue to pay for universal health coverage for California residents. Suppose the average open heart surgery costs $100,000, and at that price 23,339 surgeries are performed each year.
For the purpose of this analysis, assume that people could get the surgery elsewhere.
Which curve on the supply and demand graph would shift? What happens to producer and consumer surpluses? What happens to deadweight loss? Fully explain what the most likely outcome would be in this market if a tax on surgeries is implemented. Use a graph if it will help.
THANK YOU FOR THE HELP <3
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You could have at least numbered the questions, so we could separate the answers.
1. Emergency room health care demand is steep because it is more of a necessity when it is used. Elective surgery is the opposite because it is less of a necessity when compared to the ER.
2. When healthcare insurance prices go down people have more money to spend on vacations.
3. When fishing line prices go down, people will buy more fishing line; but they will also buy more fishing lures since those items are usually bought together. Therefore, they are complements.
4. It is inline with economic thinking since the price of college will get more expensive when you are more and more willing to not give up (i.e. you're getting closer to graduation).
5. the demand curve will shift to the left.
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