Suppose the government in each province of country X sets the price of health care. a....

 

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Suppose the government in each province of country X sets the price of health care. a. Using the data in table 3.1 for Year 1 only, calculate the arc price elasticity of demand for visits to the dentist in country X in Year 1. b. If income levels are much lower in province A than province B, would your answer to (a) be an overestimate or underestimate of the price elasticity of these services? Illustrate this idea using a graph. c. Calculate the change in visits to the dentist in Province A you would expect to see given an increase in price of 20% if the price elasticity is what you calculated in (a). d. Calculate the change in visits to the dentist in Province B you would expect to see given an increase in price of 20% if the price elasticity is what you calculated in (a). e. Use the data from years 1 and 2 to calculate the arc elasticity of demand for visits to the dentist in country X knowing that the population in province A is half as big as the population in province B. You will need to compute first the elasticities in each province. Table 3.1: Price and quantities of visits to family doctors in provinces A and B, years 1 and 2. Year 1 Year 2 Province A Province B Price 90 150 Quantity 4000 3000 Price 75 125 Quantity 3400 2600 Suppose the government in each province of country X sets the price of health care. a. Using the data in table 3.1 for Year 1 only, calculate the arc price elasticity of demand for visits to the dentist in country X in Year 1. b. If income levels are much lower in province A than province B, would your answer to (a) be an overestimate or underestimate of the price elasticity of these services? Illustrate this idea using a graph. c. Calculate the change in visits to the dentist in Province A you would expect to see given an increase in price of 20% if the price elasticity is what you calculated in (a). d. Calculate the change in visits to the dentist in Province B you would expect to see given an increase in price of 20% if the price elasticity is what you calculated in (a). e. Use the data from years 1 and 2 to calculate the arc elasticity of demand for visits to the dentist in country X knowing that the population in province A is half as big as the population in province B. You will need to compute first the elasticities in each province. Table 3.1: Price and quantities of visits to family doctors in provinces A and B, years 1 and 2. Year 1 Year 2 Province A Province B Price 90 150 Quantity 4000 3000 Price 75 125 Quantity 3400 2600

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ANSWER a The arc price elasticity of demand for visits to the dentist in country X in Year 1 is 05 b ... View the full answer