The Nursing Home Market by Jeffrey A. Rhoades

Author:Jeffrey A. Rhoades [Rhoades, Jeffrey A.]
Language: eng
Format: epub
ISBN: 9780815332015
Barnesnoble:
Publisher: Taylor & Francis
Published: 1998-09-01T00:00:00+00:00

Elasticity

Demand for Nursing Home Care

Frequently in economics one may be interested in interpreting the effect of a percentage change of an independent variable on the dependent variable The concept of the elasticity of a variable is used for this purpose. The elasticity of Y with respect to X, for example, can be defined as the percentage change in Y divided by the percentage change in X. In general, elasticities are not constant but change when measured at different points along the regression line. By convention elasticities are calculated at the point of the means of each of the independent variables. The values of the elasticity are unbounded and may be positive or negative. Elasticities are particularly useful because they are unit-free; i.e., their values are independent of the units in which the variables are measured. In general, large elasticities imply that the dependent variable is very responsive to changes in the independent variable (Pindyck and Rubinfeld 1981). A price elasticity of demand for nursing home care is determined.

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