HMGT435 Assignment 3: Market Structure of Healthcare Industry

Instructions

Pick one of the following healthcare industries listed below. Using what you have learned so far about market structure and the impact on supply and demand, write a 7 page report (double-spaced) addressing the following questions:

1- From what you have learned in class and research you have done on-line what is the market structure of that industry (e.g perfectly competitive, oligopoly, monopoly, other)

2- What are the implications of the market structure on the demand and supply curve and price of the services offered?

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3- What is the implication of third-party payers like private health insurance or federal programs like Medicare and Medicaid on demand and supply in this industry?

4- How has the government intervened in the industry and what was the economic rationale for the intervention? Was there a market failure or other rationale for intervention? Discuss

Choose one of the following industries to discuss the answers to the above questions:

a- Pharmaceutical Industry

b- For-profit health insurers

C- Not-for profit health insurers

D- Any physician specialty (e.g. cardiology, ophthalmology, etc.)

E- Hospital (national Network)

F- Small rural hospital

HMGT435 Health Care Economics Assignment 1

Suppose this is the market demand curve of eye glasses.

Respond to each following scenario about how the demand (or quantity demanded) may change. You need to post one of the figures copied from the study material file for each question and briefly explain it in your own words. (40%)

The price of eye-glasses goes up.
The price of eye-glasses goes down.
The price of contact lens goes up.
The price of contact lens goes down.
An increase in the income of consumers.
A decrease in the income of consumers.
A successful advertisement that promotes a fashion to wear glasses.
A news shows that more and more people who wear contact lenses cause keratitis.

In the week 2 summary slides, we discussed “consumer surplus” based on a market demand curve. Now let’s think about the consumer surplus from an individual demand curve. You want to buy a box of Vitamin C and this is your demand curve for this product. (Unit of quantity: box.) (40%)

If the price is $20, how many boxes do you buy? If the price is $15, how many boxes do you buy?
If the price is $10, how many boxes do you buy? Is there any consumer surplus for this transaction? Why?
Suppose the price is $20 and there is a promotion that buy 1 get the 2^nd five dollars off and get the 3^rd ten dollars off. How many boxes of Vitamin C do you buy based on this demand curve? Is there any consumer surplus for this transaction? Why?
From (c), what do you think of the merchant’s idea of the pricing strategy for this promotion?

Compare the own-price elasticity of the demand for the medical services below. Discuss which one is the most elastic and which one is the least elastic. Provide your explanation. (no more than one page) (20%)
1. Knee replacement to ease the discomfort by aging joints
2. Life threating event and sent to emergency department
3. Flu shot vaccination

HMGT435 Assignment 3: Market Structure of Healthcare Industry