Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 11AP
(a)
To determine
Reason for the shape of
(b)
To determine
Reason for the shape of production possibility frontier in between points B and C.
(c)
To determine
The points of consumer preference in the production possibility frontier.
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Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices).
Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices). How might health education affect this choice? What if medical care becomes more productive (more health benefit per “unit” of medical care consumed)? What if medical care becomes cheaper? Explain in terms of the model (i.e. what does it change in the model).
The Grossman model envisions consumers deciding between investments in health H and investments in home goods Z. Figure below depicts a typical consumer’s production possibility frontier for health and home goods.
a. Would any consumer with typical preferences ever pick a point on the graph between A and B? Explain succinctly (using Figure attached) why or why not.
b. Succinctly describe why the graph is shaped the way it is between pointsA and B.c. Succinctly describe why the graph is shaped the way it is between points B and C.
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