1. Suppose there is a mutual fund and each consumer buys a share in it for her endowment at t = = 0. The mutual fund maximises the wealth of its shareholders when choosing IF, the investment in the long term technology. At t = 1, the mutual fund pays dividend d to each of its shareholders. At t = 1, the shares can be traded at price p². a. Set up the mutual fund's optimisation problem and derive and interpret the first order condition. What happens when R increases and why? b. What is the optimal consumption profile c, cand the optimal investment IF? c. Calculate (i.e. derive an expression for) d and pª.
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- 7) In McGuire and Pauly (1991) model of physician inducement, an indifference curve: a) between income and leisure is downward sloping b) between income and leisure is upward sloping c) measures the combinations of income and leisure that provide different levels of utility d) b and cIn the RAND study, two plans had full coverage for spending within the hospital, but one had a $150 deductible for ambulatory care. Th e plan with the ambulatory care deductible had a lower probability of hospital admission (0.115) per year than did the plan with full coverage for everything (0.128), even though both plans covered hospital care fully. (See Table 5.4. Page 120 of the Textbook: Health Economics Charles) What does this tell you about the use of hospital and ambulatory. Table 5.4. Hospital use in HIS Plan Admissionsper Year Inpatient Cost(1984 Dollars) C = 0 0.128 409 C=0.5 0.092 450 C=0.95 0.099 315 $150 individual deductible 0.115 373Describe Grossman's Improvement Model of Health. How does Grossman reconcile health as both something in demand and something produced by individuals?
- 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).While it may seem intuitively obvious that health expenditures will increase as a population age – older people, after all, are less healthy on average than younger people – in fact, several prominent health economists have argued that it is not ageing per se, but rather some of the correlates of an ageing population that cause health expenditures to rise as population ages. For instance, Getzen (1992) argues that, at least in part, rising health expenditures with an ageing population are due to the higher incomes and resources of the older population; health care is a normal good, so higher incomes lead to higher expenditures. In a similar manner, Zweifel et al. (1999) argue that the real problem with an ageing population, at least as far as health care costs are concerned, is that there will be more people who are within a couple of years of dying. Since health care expenditures rise sharply close to the end of life, it is this, rather than population ageing by itself, that leads to…While it may seem intuitively obvious that health expenditures will increase as a population ages – older people after all are less healthy on average than younger people in fact, several prominent health economists have argued that it is not aging per se, but rather some of the correlates of an aging population that cause health expenditures to rise as a population ages. For instance, Getzen (1992) argues that, at least in part, rising health expenditures with an aging population are due to the higher incomes and resources of the older population; health care is a normal good, so higher incomes lead to higher expenditures. In a similar manner, Zweifel et al. (1999) argue that the real problem with an aging population, at least as far as health care costs are concerned, is that there will be more people who are within a couple of years of dying. Since health care expenditures rise sharply close to the end of life, it is this, rather than population aging by itself, that leads to higher…
- Suppose consumers consume and gain utility from two types of goods and services – (1) health care and (2) all other goods & services. Using this information, derive the demand curve for health care.One of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.What are the purpose of individual enterepreneur? What are the few advantage or merits of individual enterepreneur?
- Jeremiah faces probability of illness p=0.20, healthy-state income $310, and sick-state income is $110 Jerimiah's satisfaction depends on his earned income. His utility function () is summarized in the table below INCOME 50 100 110 150 200 250 300 310 350 400 UTILITY 171 200 205 218 230 240 248 249 255 260 Using the information above, calculate Jeremiah's expected utility of income E[U] without health insurance PLEASE INCLUDE ONE DIGIT AFTER THE DECIMAL POINTIn what sense is the individual considered a “producer” of health in the Grossman model?Give typing answer with explanation and conclusion Suppose that a consumer’s demand curve for medical care is QD = −3P +17 with P = $5. Suppose that the beneficiary obtains an insurance plan through an insurer with a 25% coinsurance rate. Under the insurance arrangement, find the following: (a) Equilibrium price and quantity of medical care? (b) Magnitude of deadweight loss? (c) Cost to the beneficiary? (d) Cost to the insurer?