Higher prices or higher utilization or a combination of two

Assignment Help Business Economics

Reference no: EM131101307

Consider the following aggregate economic data regarding all the health care goods and services in a given country: Tylenol X-ray Physical therapy Year Price Aggregate expenditures Price Aggregate expenditures Price Aggregate expenditures 2010 3 60 100 1,000 10 500 2011 4 80 40 2,000 70 1,750 2012 5 75 45 3,375 75 900 Assume that the typical basket of goods for an average consumer contains one X-ray, two sessions of physical therapy, and three packs of Tylenol. a. For each of these three health care goods and services, is the increase in aggregate expenditures over time due to higher prices or higher utilization or a combination of the two? Show your work. b. Compute the CPI for all three years using 2010 as the base year. Show your work. c. What is the inflation rate between 2010 and 2011? Between 2010 and 2012? Between 2011 and 2012? Show your work. d. Explain one of the potential problems with using a simple Laspeyres index to measure medical inflation.

Reference no: EM131101307

Questions Cloud

What are the fixed costs of the firm-what are the profits : A firm is producing 200 units of its product. At this level of output the AVC=$20, and the ATC=$70. The firm is a price taker and the price for its product is $100. Assuming that the firm is maximizing profits and that labor is the only variable inpu..

Which factors can contribute to a reduced perception of risk : Using the housing market as an example, explain the following concepts: (a) loan-to-value ratio (b) asset price bubble (c) financial accelerator. In the financial asset feedback process, which factors can contribute to a reduced perception of risk?

The demand for liquor is inelastic : A state in the southeastern region of the United States operates state liquor stores. Prices at the stores are set in the following fashion: add 41% to the wholesale price at which the system acquires the product. To that is added an excise of $8.10 ..

Decides to focus more on reducing income inequality : Consider the market for labor is segmented into the market for low skilled labor and the market for high skilled labor. If the low skilled labor market is given by the following function: labor demand: w = 35 – 0.005L; and labor supply is 4000. What ..

Higher prices or higher utilization or a combination of two : Consider the following aggregate economic data regarding all the health care goods and services in a given country: Tylenol X-ray Physical therapy Year Price Aggregate expenditures. For each of these three health care goods and services, is the incre..

Discuss the risks of introducing market mechanisms of supply : Describe how free market features could be introduced to help alleviate the social problem through free market operations of supply and demand. Discuss the risks of introducing market mechanisms of supply and demand in situations where.

Explain why the price elasticity of demand is negative : Explain why the price elasticity of demand is negative. What would the price elasticity of demand be for a “prestige good”, one for which quantity purchased increases as price increases? How do you reconcile these two statements?

Example of market that is monopolistically competitive : In many urban areas, the fast food industry is a common example of a market that is monopolistically competitive. Are there any barriers to entry for potential firms that might wish to enter the fast food industry? Also, what are the prospects for a ..

User Account

All Pages