ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- 3arrow_forward12 Demand elasticity and social loss. Consider two vaccines for difffferent viruses χ and Ω Assume that the marginal cost of producing both drugs is constant and that the fixed cost is small. In other words, assume that the supply curve for both drugs is flat. a Suppose that demand for vaccine χ is price elastic, whereas demand for vaccine Ω is relatively inelastic. Plot the private demand curve for both drugs on separate axes. b For the sake of example, assume that both viruses have the same externality. Plot the social demand curve for both drugs and label the social loss in each case. c Explain intuitively why, all else equal, social loss is greater in the case of elastic demand than it is in the case of inelastic demand.arrow_forward9. Consider the following hypothetical three-stage screening test for a cancer with the following rates of detection and costs: Stage 2 3 Number of Cases Detected 100 110 125 135 Total $150,000 $180,000 $250.000 $310.000 A. Calculate the average cost per cancer detected in the three stages. B. Calculate the marginal cost per cancer detected in the three stages. C. Suppose that the marginal benefit per treated case is $4,600 per person. What would be the optimal screening, given the costs?arrow_forward
- 3. Consider the adverse selection model of health insurance. ● (a) Why is the marginal cost curve negatively sloped?arrow_forwardIf surgeons really have the ability to increase thedemand for surgeries, which kinds of surgerieswill be most affected? Can you think of a way todetermine which surgeries are unnecessary? Provide several examples from your own readings orexperience.arrow_forwardCanarrow_forward
- Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardGive typing answer with explanation and conclusionarrow_forwardSuppose a US medical board is using marginal analysis to determine the optimal screening frequency for a specific disease. Below is the approximate number of early cases detected as you expand testing to a broarder population. Suppose further that each early detection case is considered to have a benefit of $50,000 and the cost of screening one person is $20,000. Number of people Total Number of screened in a Early Detection given a year Cases 1,000 500 2,000 1000 3,000 1400 4,000 1700 5,000 1900 The marginal benefit to screening 2 thousand people is, and 3 thousand people is 500 early detection cases ($25,000,000); 400 cases ($20,000,000) 1000 early detection cases ($50,000,000); 1400 ($70,000,000) early cases O 1400 ($70,000,000) early cases; 1000 early detection cases ($50,000,000) 400 cases ($20,000,000); 500 early detection cases ($25,000,000) Parrow_forward
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