nd for medical services will lead to an increase in price for medical services until such time as demand is satisfied. In turn, increasing prices for medical services will lead to an increase in the supply of medical services, until prices level off as demand is satisfied (Jacobs, 1997).
To an extent, but not completely, the simultaneous increase in physician income and physician supply between 1977 and 1994 is explained by the basic economic analysis described above. As the American population increased from 220 million 1977 to 254 million in 1994, an increase of 15.5 percent over the 17-year period. As the American population increased, the proportion of elderly persons (65 years old and older) in the population also increased from 10.8 percent to 12.4 percent (Bureau of Labor Statistics, 1996). Both a larger population and a higher proportion elderly persons in the population are consistent with an increased demand for medical services, all other factors remaining unchanged. Thus, an increased
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