Question 1 (5 marks) Studies have shown that the price elasticity for GP consultations is -0.2...

Question

Question

Question 1 (5 marks)

Studies have shown that the price elasticity for GP consultations is -0.2 and for emergency department servicesit is -0.05.

If the government promises to reduce the co-payment of GP services by 10% what will be the impact (in percentage terms) on GP utilisation. Will total expenditure on GP services increase or decrease? (2 marks)

If a price rise of 10% is imposed on emergency department services, what will the impact be (in percentage terms) on ED use? (1 marks)

Using a diagram with an indifference curve and budget constraint, explain what would happen to the demand for ED and GP consultations if co-payments for GP consultations decreased but ED co-payments stayed the same (2 marks)

business economics

Answer 1

Answer #1

Answer 2

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