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04a applying supply and demand analysis to health care

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04a applying supply and demand analysis to health care

  1. 1. Appendix Chapter 4Applying Supply and Demand Analysis to Health Care ©2000 South-Western College Publishing
  2. 2. What does the demandcurve for health care look like?It is downward sloping just as there is for other goods and services 2
  3. 3. What does the supply curve for health care look like?It is upward sloping just like the supply for other goods and services 3
  4. 4. P The Supply & Demand for Health Care C SP3 A Copayment QP1 BP2 D Q1 Q2 4 Q
  5. 5. What is the copayment rate?The percentage of the cost of services consumers pay out of pocket 5
  6. 6. What effect does thecopayment rate have on the quantity of health care demanded?It increases the quantity demanded because people pay on average only 20% of the cost 6
  7. 7. What can cause shifts in the demand for health care? A change in ...• Number of buyers• Tastes and preferences• Income• Prices of substitutes 7
  8. 8. The effect of an increase in demand on market equilibrium for health care E2 SP2 E1P1 D2 D1 Q1 Q2 8
  9. 9. The effect of a decrease in demand on market equilibrium for health care E1 SP1 E2P2 D1 D2 Q2 Q1 9
  10. 10. Increase in quantity supplied Increase in equilibrium priceIncrease in demand 10
  11. 11. Decrease in quantity supplied Decrease in equilibrium priceDecrease in demand 11
  12. 12. What can cause shifts in the supply for health care? A change in ...• Number of sellers• Resource prices 12
  13. 13. The effect of a decrease in supply on market equilibrium for health care S1 S E1 2P1 E2P2 D Q1 Q2 13
  14. 14. The effect of a decrease in supply on market equilibrium for health care S2 S E2 1P2 E1P1 D Q2 Q1 14
  15. 15. Increase in quantity demanded Decrease in equilibrium priceIncrease in supply 15
  16. 16. Decrease in quantity demanded Increase in equilibrium priceDecrease in supply 16
  17. 17. END

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