Explain how changes in incomes, population, and lifestyles contribute to increasing health care costs
What will be an ideal response?
First, health care is a normal good with an income elasticity of about +1.0. Spending on health will rise in proportion to per capita income. Health care is also price inelastic, which means that total health care spending will increase even as the price of health care rises. Second, the population of the United States is aging, so this change will increase the demand for health care. Third, the higher incidence of unhealthy lifestyles because of alcohol, tobacco, or drug abuse increases the demand for and spending on health care.
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A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5 . The firm can sell the 100th unit for $4.75 . The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses)
a. True b. False Indicate whether the statement is true or false
Refer to the graph shown. The profits earned by the monopolistically competitive firm represented equal:
A. $120. B. $0. C. $45. D. $15.
When uncovered interest parity holds, it means that
A. the exchange rate risk is unusually high. B. a currency is expected to appreciate by as much as its interest rate is higher than the interest rate in the other country. C. a currency is expected to appreciate by as much as its interest rate is lower than the interest rate in the other country. D. the forward premium equals the interest rate differential.
If disposable income increases from $9,000 billion to $11,000 billion, and consumption increases from $9,500 billion to $11,000 billion, the MPC must be
A. 0.75. B. 0.90. C. 1.00. D. 0.25.