8) The following graph shows two different optimal bundles for an individual choosing their level of medical expenditures. Briefly describe what each of the straight lines originating at the origin depict and what the graph portrays regarding the relationship between health insurance and the demand for health care. The Price Elasticity of Healthcare Utilization: A Hypothetical Example 2,000 1,800- 1,600 1,400- 1,200- 1,000- S00 600 400 200- 1,000 20000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Total medical expenditure (S) Greater utility (S) yod-gono

8) The following graph shows two different optimal bundles for an individual choosing their level of medical expenditures. Briefly describe what each of the straight lines originating at the origin depict and what the graph portrays regarding the relationship between health insurance and the demand for health care. The Price Elasticity of Healthcare Utilization: A Hypothetical Example 2,000 1,800- 1,600 1,400- 1,200- 1,000- S00 600 400 200- 1,000 20000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Total medical expenditure (S) Greater utility (S) yod-gono

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

ChapterST7: The Economics Of Health Care

Section: Chapter Questions

Problem 1CQ

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1. Utility and Consumer Surplus A. Use the figure below to fill in the total utility and marginal utility of medical care in the table. In this example, is the marginal utility of health care increasing or decreasing? What are some reasons why this might be the case (briefly explain; approximate 3 sentences)? Health (H) Utility 16 15 13 10 3 4 Medical care (q) 1 2 Units of Medical Care 0 1 Total Utility Marginal Utility 2 3 4 Briefly explain: Conceptually, does the marginal utility scheduled above reflect your own demand for going to the dentist to get a check-up?
Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.
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9a Briefly explain what the present value of a health care and prevention
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What would happen if, in order to provide lower cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Please answer questions a, b, and c below.) What is the effect of this maximum price legislation on the market for health insurance? Briefly explain the situation for both consumers and producers (i.e. health care providers). What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?
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