Answer to Question #306837 in Microeconomics for Yabu

Question

Discuss the situation when the supply a particular health care service becomes price elastic, inelastic and neutral

Answer 1

Discuss the situation when the supply of a particular health care service becomes price elastic, inelastic, and neutral

Elasticity measures how sensitive a commodity's demand changes in response to other economic factors such as pricing and consumer income. It's calculated by multiplying the percentage change in the amount of a good demanded by a percentage change in another economic variable.

When a good is elastic, it means the quantity demanded changes with a change in the price of a good. Health care services can be elastic when the disease is not serious. When the price of the health care service rises, the demand for it reduces. When the health care service deal with terminal or advanced diseases, it is inelastic. The price increase will not affect the quantity demanded since there is no other option to get healed. When the disease seriousness is medium, the change in price will result in a proportional change in quantity demanded.