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# PERTEMUAN

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DETERMINANTS OF DEMAND
Oleh :
DESTANUL AULIA, SKM, MBA, MEc, PhD
WHAT IS DEMAND ?
Demand is dened as the strength of the consumers
desire to consume goods and services and their
willingness to sacrice in order to consume the goods and
services.
The quantity of particular good demanded is determine
by many factors. Hence the demand function summarize
this relationship :
Qd = f (P, RP, Y, T....) , P = price of the good ; RP = price
of other related goods; Y = Income ; T = Taste and
preferences of individuals.
DEMAND CURVE
P
Demonstrate the relationship
between quantity demanded
and price.
This is called demand curve.
The graph shows that price of
good and services is inversely
related to quantity demanded.

Qd
ELASTICITY
To indicate how changes in quantity
demanded (Qd) are aected by a change in
one of the factors inuencing demand e.g.
Price of good, income of consumers.
PRICE ELASTICITY OF DEMAND

## Refers to responsiveness of demand to change with the change in price.

This is measured by expressing the percentage change in quantity
demanded (Qd) as the proportion of the percentage change in price (P).
Ed =% /%
If Ed > 1 : the demand for the goods is said to be elastic
If Ed < 1 : the demand for the good is inelastic
If Ed = 1 : the demand is unitary elastic
Price elasticity of health care in many studies was found to be between
-0.2 to -0.1 which is inelastic. 10 % increase in price will only cause the
demand to fall between 1 to 2%
INCOME ELASTICITY OF DEMAND

## Measure the responsive in quantity of demand (Qd)

which arise from change in income (Y).

Ed = % /%
Income elasticity of demand in many studies was found
between 1.5 t0 2 which is elastic.
10% increase in income will increase the demand for
health care by 15 to 20%.

CROSS ELASTICITY OF DEMAND

## Measure the responsive in quantity demanded of good

A (Qda) which arises from changes in the prices of
other goods (Pb).

Ed = % /%
Cross elasticity of demand between public and private
health care was found to be between 1.5 to 2.5.
10% increase in price of private care will increase the
demand of public health services by 15 to 25%
NEED, DEMAND AND UTULISATION

## In health care, need and demand have to

clearly dierentiated.
This is because it is erroneous to assume that
all health needs would be translated into
demand.
Social policy researchers classied at least
four types of needs.
FOUR TYPES OF NEEDS

1. Normative need occurs where pople have a standard health care below
that which the health care expert dene as desirable. It is actually
professionally dened needs. It must be noted that desirable standards
may vary between experts.
2. Felt need occurs where people want health care; it relates to the
individual perceptions as regards to health care. This may conict with
views of others including the professionals.
3. Expresses need is the felt need which is converted into demand, for
example by, seeking health care form a doctor.
4. Comparative need occurs where one group in society with given health
characteristics does not receive health care whereas others with identical
characteristics are in receipt of care.
UTILISATION

supply factors.

## Needs Felt Needs Demand Utilisation Supply

FACTORS INFLUENCING DEMAND

## Dms = F(Pms, Y,T,P1,...Pms-1)

Pms = Price of medical care
Y = Income
T = Taste and preference
P 1.....Pms-1 = Price of other competing
or complementary medical services

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