Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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A friend of yours is considering two movie streaming services. Provider A charges $120 per year
for the service regardless of the number of movies streamed. Provider B does not have a fixed
service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by
the equation QD150-50P, where P is the price per movie.
With Provider A, the cost of an extra movie is
movie is
Given your friend's demand for movies and the cost of an extra movie with each provider, if your
friend used Provider A, he would watch
movies, and if he used Provider 8, he would watch
movies.
This means your friend would pay
with Provider B.
of
LM
Use the following graph to draw your friend's demand curve for movies. Then use the green
triangle to help you answer the questions that follow
Note: You will not be graded on any changes you make to the graph.
AM
AM
AME
M
With Provider B, the cost of an extra
Quantity of Moves
Your friend would obtain
surplus with Provider B.
for service with…
Ali Receives Utility From (D)omestic Vaccines from Kayseri, and the Sinovac Vaccine-(F)oreign. The utility
structure is U(D,F)=D × F. The price of the foreign vaccine because of increasing returns to scale is $200,
whereas at its earlier stages, the domestic vaccine is produced at a higher cost, and higher price of $250.
The government has given each and every citizen a fixed payment of $8000 to spend just on vaccines,
but it has not specified which vaccines.
a-
Does Ali Solve the Utility Maximization Question in an interior equilibrium or a corner solution?
How do you know? What condition does the interior equilibrium necessitate regardless.
b- Find Ali's Utility Maximizing Level of Domestic and Foreign Vaccines when he uses just the
government allowance on vaccines? What is his utility level?
c- Suppose the government wants to decrease Turkey's health exports. It pushes a vaccine
subsidy, just for domestic vaccines that makes the price of domestic equal to $160. How does
the utility…
Ali Receives Utility From (D)omestic Vaccines from Kayseri, and the Sinovac Vaccine-(F)oreign. The utility structure is U(D,F)=D x F. The price of the foreign vaccine because of increasing returns to scale is $200, whereas at its earlier stages, the domestic vaccine is produced at a higher cost, and higher price of $250. The government has given each and every citizen a fixed payment of $8000 to spend just on vaccines, but it has not specified which vaccines.
a- Does Ali Solve the Utility Maximization Question in an interior equilibrium or a corner solution? How do you know? What condition does the interior equilibrium necessitate regardless.
b- Find Ali's Utility Maximizing Level of Domestic and Foreign Vaccines when he uses just the government allowance on vaccines? What is his utility level?
C- Suppose the government wants to decrease Turkey's health exports. It pushes a vaccine subsidy, just for domestic vaccines that makes the price of domestic equal to $160. How does the utility…
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