Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 16AP
(a)
To determine
Find out the meals that gives maximum utility.
(b)
To determine
Impact of miracle pills on dinner choice.
(c)
To determine
Impact of miracle pills on diner’s health.
(d)
To determine
The life-time utility maximization.
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Suppose an individual in the Grossman model is trying to decide what to have for dinner. His
options are as below. Each dish has an effect on the level of home good Z and health H.
Мeal
Home good Z
Нeath H
Steak and eggs (A)
Kale salad with broccoli (B)
Entire box of cookies (C)
+7
-2
-2
+5
+10
-20
Suppose the dinner's single-period utility function is U=3Z+H
• If the individual is trying to maximize his single-period utility, and he can only select one
item from the table (assuming he can afford any item in the table). Which meal would he
choose? Please type in A, B, or C (do not enter space, punctuation, or any other symbols
or words)
• A miracle pill is discovered that halves the negative health impact of cookies. How does
this impact the individual's choice? What meal would be chosen now? Please type in A, B,
or C (do not enter space, punctuation, or any other symbols or words)
• If the individual lives in multi-period rather than single-period, would he value Z or H more
in…
Suppose an individual in the Grossman model is trying to decide what to have for dinner. His
options are as below. Each dish has an effect on the level of home good Z and health H.
Мeal
Home good Z
Health H
Steak and eggs
+7
-2
Kale salad with broccoli
-2
+5
Entire box of cookies
+10
-20
Suppose the dinner's single-period utility function is U=3Z+H
1. If the individual is trying to maximize his single-period utility, and he can only select one
item from the table (assuming he can afford any item in the table). Which meal would he
choose? Explain your answer.
2. A miracle pill is discovered that halves the negative health impact of cookies. How does
this impact the individual's choice? Explain your answer.
3. If the individual lives in multi-period rather than single-period, would he value Z or H more
in multi-period? Explain your answer.
Paragraph
I
U v
A
•..
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lili
B
Suppose an individual has a single period utility function represented by:
U = Z²H²
Suppose further that the individual is deciding how to spend an hour of their time. Below, you are given
information about the meal options and how each meal contributes to the "Home" ("Z") portion of utility and
the "Health" ("H") portion.
Meal
Health (H) contribution to
Utility
Puzzle
Jogging
Watching netflix
+10
Home Good (Z) contribution to
Utility
Jogging
Watching netflix
Doing a puzzle
If the individual is in a one-period model, meaning they only care about maximizing utility today, what will they
choose?
+1
+3
+3
+5
+3
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