quilibrium

Medicare recipients can purchase supplemental private insurance (known as Medigap insurance) to fill the gap in coverage left by Medicare. This gap includes copayments, deductibles, and prescription drug expenses not covered by Medicare. Several years ago, the government enacted regulations that specify minimum standards for items that Medigap policies must cover. This made the policies more expensive, and as a consequence, about 25 percent of the elderly who would have purchased some Medi-gap insurance purchased none at all [Finkelstein, 2004]. Consider an individual who consumes two goods, "insurance" and "all other goods." The cost of a unit of Medigap insurance is $1, as is the cost of a unit of all other goods. Sketch a budget constraint and set of indifference curves that are consistent with the following scenario: In an unregulated market, an individual with a $30,000 income purchases $5,000 worth of Medigap insurance. The government then puts mandates on Medigap policies that…

In the context of regulating new drugs, a type I error occurs when and a type II error occurs when A bad drug gets rejected and does not go on the market; a good drug gets approved for sale A good drug gets rejected and does not go on the market; a bad drug gets approved for sale A good drug gets approved for sale; a bad drug gets rejected and does not go on the market A bad drug gets approved for sale; a good drug gets rejected and does not go on the market

The mayor of Green City is considering whether to institute a Covid vaccine mandate for public employees. The fire chief opposes vaccination, and has threatened to resign if a mandate is instituted.  The mayor believes that instituting a mandate is critical to getting Covid under control, and thus not instituting the mandate would costs the city -50 utility.  However, the fire chief is critical to maintaining public safety.  If the fire chief resigns, it would cost the city 75 utility.  The fire chief believes a mandate would be an invasion of his personal freedom, costing him 20 utility.  The mandate only impacts the fire chief if he does not resign.  However, resigning his job as fire chief would cost him 40 utility.  Draw this game.  Identify how many subgames it contains.  Then, solve the game to find all subgame perfect Nash equilibria.