Answer to Question #278158 in Microeconomics for Nish

Question

Why measuring price, income, cross and advertisement elasticities of demand for an

insurance product is good for the growth of the sector? Use supply and demand curves to

illustrate how each of the following events would affect the price/ or premium and quantity of

a private health insurance policy a) if you get benefits under health insurance plan of the state

government b) a decrease in your average income level during pandemic c) if policy

premiums are expected to increase in coming future and d) if more tax benefits are provided

for taking this policy.

Answer 1

it helps us understand whether raising prices or lowering prices will enable us to achieve our pricing objectives.

a.

if you get benefits under health insurance plan of the state government, it will decrease demand and supplyfor private health insurance.

b.

a decrease in your average income level during pandemic will decrease demand and supplyfor private health insurance.

c.

premiums will decrease demand and supplyfor private health insurance.

d.

tax benefits increse demand and supplyfor private health insurance.