Why is healthcare generally considered to be inelastic (have low elasticity) but individual doctor's offices or hospitals may be considered elastic, when it comes to price/demand?

Economics Jan 22, 2021

Expert Solution

Healthcare is an industry while doctors and hospitals are a part of this industry.

When prices change in the entire healthcare industry, there is not much a consumer can do in terms of their demand for healthcare. There is no alternative to healthcare when a person needs it. Therefore, healthcare has an inelastic demand.

On the other hand, there are many doctors and hospitals. If one doctor or hospital increases their prices, consumers can go to a different hospital or doctor. This leads to the demand for doctors and hospitals being elastic.

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