Q. 4. Mr. Lucas referred to a national study of copayment levels. The important results of this...

Question

Q. 4. Mr. Lucas referred to a national study of copayment levels. The important results of this study

are provided in Exhibit 3.

a. Calculate the price elasticity of demand for physician visits at each copayment level using the arc method. What does the data tell you about the price elasticity of demand for physician visits? How does this information help Mr. Fleming in making his decision?

b. Using the six months of data provided in the Excel data file, simulate the profitability of the physician services department if copayments are increased to $20 per visit. Repeat your analysis using a copayment of $25 per visit.

brightform-case-text-1-narfybmd.pdf brightform-hints-4hxkhula.docx brightform-student-data-spreadsheet-2-f32hyj2o.xlsx brightform-student-data-spreadsheet-2-qea33gwa-d2i4b3u5.xlsx brightform-hints-ta31xoea-eysypzar.docx

Harshit · Accepted Answer

4. 
(a) 
Arc Method Formula is
Price Elasticity of Demand = ((Q2 - Q1) / 1 / 2 (Q1 + Q2)) / ((P2 - P1) / 1 / 2 (P2 + P1)
	Copayment Level
	Physicians Visits Per capita
	% change in Quantity
	% change in Price
	Elasticity
	10
	6.3
	                                        -   
	                                -   
	                       -   
	15
	6
	-4.88%
	0.

Q. 4. Mr. Lucas referred to a national study of copayment levels. The important results of this study are provided in Exhibit 3. a. Calculate the price elasticity of demand for physician visits at...

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