Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 3, Problem 6E
To determine
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Nutritional economics.
Suppose we are considering a hungry individual in the Gross-man model deciding what to have for dinner. His options are listed in Table 3.2. Each dish has an effect on the level of the home good Z and health H.a. Suppose the diner’s single-period utility function is as follows: U = 3Z + HIf the diner is trying to maximize his single-period utility, and he can only select one item from Table 3.2, which meal would he choose?b. A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the diner’s choice?c. What effect does the miracle pill have on the diner’s health H? Interpret this result.Does this mean the diner would be better off without the miracle pill?d. If the diner is instead trying to maximize his lifetime utility and not just his single-period utility, how might your answer to Exercise 16(a) change? Is he likely to value Z or H more in the lifetime context than the single-period context? Explain your answer, and…
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.
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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…
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