The price elasticity of demand for the services of Kim Jones, MD, is 4.0. The price elasticity
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The price elasticity of demand for the services of Kim Jones, MD, is −4.0. The price elasticity of demand for physicians’ services overall is −0.1.
a. Why is demand so much more elastic for the services of Dr. Jones than for the services of physicians in general?
b. If Dr. Jones reduced prices by 10 percent, how much would volume and revenue change?
c. Suppose that all the physicians in the area reduced prices by 10 percent. How much would the total number of visits and revenue change?
d. Why does it make sense that your answers to questions b and c are so different?
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a Demand is more elastic for the services of Dr Jones than for the services of physicians in general ...View the full answer
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