Question

One way to test whether physicians induce demand is to see a. Whether price stays the...

One way to test whether physicians induce demand is to see

a. Whether price stays the same or rises in response to an increase in the number of physicians.
b. Whether demand increases in response to an increase in the number of physicians in a specific area.
c. Whether physicians provide the same or more services when they face a decline in payment.
d. All of the above.
e. A. and B. only

Homework Answers

Answer #1

Answer- The correct answer is E ie., A and B only. If the number of physicians rises in a particular area then there will be more supply of physicians and thus it may lead to decrease in demand and hence the demand will be affected. Increase in the number of physicians is a part of factors other than price. When the number of physicians rise the price will change and hence the demand will also be affected ie., it may rise or fall as per law of demand. But if the the physicians face decline in payment then providing of same or more services may not lead to increase or decrease in demand. It will just add to the value of the services provided as the primary motive of people to bisit a physician is to get medical help.

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