Cost elasticity for hip replacement surgeries

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Reference no: EM137511

Assume that the cost elasticity for hip replacement surgeries is 0.3. Additionally assume that hip replacement surgeries are originally not covered by health insurance as well as that at a cost of $50,000 each, 10,000 such surgeries are demanded every year.

Assume that health insurance begins to cover hip replacement surgeries that everyone interested in getting a hip replacement has health insurance. As if insurance covers 70% of the cost of the surgery, by what percentage would you expect the quantity demanded of hip replacements to increase? Calculate the percentages consider changes using the midpoint formula. If insurance covers 70.00% of the bills just assume that the cost paid by consumers falls 70%.

Reference no: EM137511

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