Assignment task: Instructions for this assignment:
Part I: Respond to the following questions:
Q1. Why are elasticities useful for managers?
Q2. Why are price elasticities called "elastic" or "inelastic" when other elasticities are not?
Q3. Why is the demand for healthcare products usually inelastic?
Part II:
| Period |
Clinic 1 |
Clinic 2 |
Clinic 3 |
Clinic 4 |
Total |
| This Year |
16, 640 |
41,600 |
24,960 |
33,280 |
116,480 |
| Next Year |
? |
? |
? |
? |
121, 139 |
1. The table above lists visits for the four clinics operated by your system. You anticipate that volumes will increase by 4 percent next year. Forecast the number of visits for each clinic, and explain what assumptions underlie your forecasts. For example, are you sure that all of the clinics can serve additional clients?
2. A major employer has just added health insurance coverage for its employees. Consequently, 5,000 of your patients will pay a $30 copayment rather than the list price of $100 for a visit. These patients average 2.2 visits per year. You believe the price elasticity of demand is between -0.15 and -0.35. What is your forecast of the change in the number of visits?
3. Forecasting the Demand for Transfusions. Please answer the following questions:
a. What sort of model would you recommend to predict the demand for blood? What would you do with your predictions?
b. Why would the presence of seasonal effects be important?
c. Taylor suggested using a statistical model to forecast demand. What judgment does a statistical model require?
d. What sorts of changes in the environment would you need to account for in your forecasting model?
Use any program to display data, charts, graphs, etc.
Reference:
Lee, R. H. (2015). Economics for Healthcare Managers. Third Edition.
Chapter 8 Elasticities and Chapter 9 Forecasts