On the demand side, what recent legislative and demographic developments

301 Essay Homework #1
Fall 2015
Dr. Colburn

Read the following statement and
answer each of the following questions.

Professor Uwe Reinhardt of
Princeton University, writing in the New
York Times on 31 August 2012, noted that the U.S. is headed toward a “major shortage of physicians.” Assume this is true and that the market for
physicians can be described by conventional demand and supply influences.

(a) On
the demand side, what recent legislative and demographic developments likely
have increased the demand for medical care by physicians?
(b) On
the supply side, what prevents medical schools from increasing the sizes of
their classes and producing lots more physicians in coming years? (Do a bit of Googling here; however, you
could also look at the 2012 State of the
RegionReport for help. Click on .odu.edu/forecasting/state-region-reports/2012“>http://www.odu.edu/forecasting/state-region-reports/2012
(c) If
there actually is a shortage, what will it likely do to the incomes of
physicians?
(d) Assume
that physicians and nurses are hired by hospitals. Explain the isoquants and
isocosts how a shortage in physicians will affect the use of physicians.
(e) Since
the federal government pays an increasingly large proportion of medical bills,
what actions will the feds likely take if the shortage occurs and health prices
and incomes rise rapidly?
(f) There
is evidence that physicians are retiring quicker now because of the Medicare
and Affordable Health Care regulations. Given higher income from those that
stay and the greater demand does that surprise you? Why or why not?

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