Suppose we allocate a fixed budget for tuberculosis screening between two alternatives: screening the population generally, which has a marginal cost per test of MCG and a marginal benefit of MBG additional cases detected per test, and screening in homeless shelters, with a corresponding MCS and MBS. Assume it is currently true that MBG/MCG < MBS/MCS. Understanding that MB decreases (increases) as quantity increases (decreases) and the reverse is true for MC, we can conclude that: a. too much screening is being done at homeless shelters relative to general screening. b. too much general screening is being done relative to screening at homeless shelters. c. the price of screening in homeless shelters is too high. d. the allocation is already optimal if there is a fixed budget because we can’t equate the ratios of marginal benefit and marginal cost. e. we can only make the allocation optimal if the prices can be changed
Suppose we allocate a fixed budget for tuberculosis screening between two alternatives: screening the population generally, which has a marginal cost per test of MCG and a marginal benefit of MBG additional cases detected per test, and screening in homeless shelters, with a corresponding MCS and MBS. Assume it is currently true that MBG/MCG < MBS/MCS. Understanding that MB decreases (increases) as quantity increases (decreases) and the reverse is true for MC, we can conclude that:
a. too much screening is being done at homeless shelters relative to general screening.
b. too much general screening is being done relative to screening at homeless shelters.
c. the price of screening in homeless shelters is too high.
d. the allocation is already optimal if there is a fixed budget because we can’t equate the ratios of marginal benefit and marginal cost.
e. we can only make the allocation optimal if the prices can be changed
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