Friday, 6 March 2009

Demand curves slope downwards

MacDoctor writes
It comes as no surprise to me that one of the biggest blow-outs in the ACC bill (proportionally,that is) is the physiotherapy bill. In the first place, making anything “free” will always see its usage maximized. Anyone with even basic economic literacy would have known that. But the denizens of Labour’s health think tanks apparently thought that setting aside a paltry $9 million would be sufficient. One would have thought that it would have been prudent to rethink their policy when the bill actually turned out to be $58 million.
Yes, lower the "price" and quantity demanded goes up. Lower it to zero and ... oh dear.

1 comment:

V said...

Also explains how going to physio has become one of the 'to do' activities in NZ.
We must be one of the most over massaged nations on earth.