assume the health production function is h = 365-1 /H where h is the number of healthy days a person has in each year and H is the persons health capital. Assume this person earns $100 a day and the marginal cost of health investment is pi = 25 and remains constant overtime. The annual interest rate is 5% and health capital depreciates at a rate of 15% per annum. Suppose the person acquire a chronic disease and his health depreciation rate rises to 35% annually what is the new optimum level of health this person should demand now having the chronic disease? suppose instead of having a chronic disease the person experiences a recession and his wage falls to $50 a day. Assume the change in the price of time inputs changes the cost of a unit of health investment by 10%. What is the value of the persons optimal health demand now?

assume the health production function is h = 365-1 /H where h is the number of healthy days a person has in each year and H is the persons health capital. Assume this person earns $100 a day and the marginal cost of health investment is pi = 25 and remains constant overtime. The annual interest rate is 5% and health capital depreciates at a rate of 15% per annum. Suppose the person acquire a chronic disease and his health depreciation rate rises to 35% annually what is the new optimum level of health this person should demand now having the chronic disease? suppose instead of having a chronic disease the person experiences a recession and his wage falls to $50 a day. Assume the change in the price of time inputs changes the cost of a unit of health investment by 10%. What is the value of the persons optimal health demand now?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 8QAP

See similar textbooks

Similar questions

suppose the person acquires a chronic disease and his health depreciation rate rises to 35% annually. What is the new optimal level of health this person should demand now having the chronic disease? assume the health production function is h equals 365-1 divided by H where h is the number of healthy days a person has in each year and H is the persons health capital. Assume this person earns $100 a day and the marginal cost of health investment is pi equals 25 and remains constant overtime. The annual interest rate is 5% and health capital depreciates at a rate of 15% per annum
Consider a EITC program that offers a guaranteed income level. Assume a person can receive a maximum EITC benefit of $5,000 when earned income is $0; however, the maximum benefit is reduced at a 40% phase-out rate for each dollar earned beyond $0. What is the break-even point?
It is well established that indoor air quality (IAQ) has a significant effect on general health and productivity of employees at a workplace. A study showed that enhancing IAQ by increasing the building ventilation from 5 cfm (cubic feet per minute) to 20 cfm increased the productivity by 0.25 percent, valued at $90 per person per year, and decreased the respiratory illnesses by 10 percent for an average annual savings of $39 per person while increasing the annual energy consumption by $6 and the equipment cost by about $4 per person per year (ASHRAE Journal, December 1998). For a workplace with 120 employees, determine the net monetary benefit of installing an enhanced IAQ system to the employer per year.
MK Corp estimates that its demand function is as follows: Q = 400 - 12:5P + 25A + 14Y+ 10P* where Q is the quantity demanded per month, P is the product’s price (in Rs.), A is the firm’s advertising expenditure (in Rs.’000 per month), Y is per capita disposable income (in Rs’000), and P* is the price of AJ Corp. a. During the next five years, per capita disposable income is expected to increase by Rs. 5,000 and AJ is expected to increase its price by Rs 12. What effect will this have on the firm’s sales volume? b. If MK wants to change its price by enough to offset the above effects, by how much must it do so? c. Compare the profitability of maintaining sales volume by either changing price or changing advertising spending. d. If MK’s current price is $60 and it spends $10,000 per month on advertising, while per capita income is $25,000 and AJ’s price is $70, calculate the price elasticity of demand with the price change. e. What can be said about the effect of the above price change…
Suppose that you invest $50,000 into a downpayment on a $250,000 house, which has a price appreciation of 3% per year. Your mortgage is fixed at $ 36,000 per year, and your tenants pay you $24,000 per year. Property taxes, maintenance, and other expenses cost $5,000 per year. Suppose that after 25 years, you sell your property. Would it have been better to invest $ 50,000 in the stock market, assuming it has returns of 9% per year over the same time period (25 years)? Why? Show your calculations and justify your answer. For the purposes of this question, suppose that inflation is zero.
Q1) It is highly likely that the projected retirement income based on the replacement ratio method may not be sufficient to pay for retirement expenses if inflation rates are _________ wage growth rates. Q2) Which of the following statements is false? a. If there are changes to an individual’s circumstances, the retirement plan should be reviewed. b. When developing a retirement plan, one should ensure that he has contingency funds and sufficient insurance protection. c. To better achieve one’s retirement funding objectives, the funding plan should not be modified under any circumstances. d. Regular reviews on the plan should be conducted to ensure that the retirement funding objectives are met. Q3) Mr. Clifton Chen, aged 39, recently purchased an endowment plan from an insurer that requires him to set aside $25,000 per year for the next 23 years till he retires at age 62. The first premium payment occurs at the beginning of the period. Assuming an inflation rate of 2% and an…
PJ has an one-year insurance policy with a deductible of D and a maximum reimbursement of U, each applied to total annual losses. PJ experiences two losses (L1 and L2) during the year. What is the total out-of-pocket amount for PJ? (Hint: list all three possible scenarios.)
The Present Discounted Value (PDV) of a future stream of payments is _____________________ the sum of the future stream of payments. A. less than B. exactly equal to C. greater than
If your average earnings were $30,000 per year and you receive $20,000 per year in disability benefits after an accident, what is the replacement rate (rate of partial insurance)? Group of answer choices 16.67% 22.22% 33.33% 66.67%
I need some help, Also can you show me all the steps, please? Lizards of a valuable breed (Alligator lizards) have been introduced onto Lizard Island and their population is growing. The Population (P) is modelled by the differential equation dp/pt=-k(p-m) where t is the number of years that have passed since January 2022, M is an upper bound on the population due to limitations on the island’s natural resources, and k is a constant relating to the net population growth rate. Customers (Paying tourists) of the island seeing some lizards is essential for the business, so the operator is keen for the number of lizards to reach 75% of M in January 2028 (a) Use the separation of variables technique to formulate a solution to the differential equation. (b) In January 2022, there were 50 lizards and in January 2023 there were 60. Current scientific research estimates k as 0.05, but M is unknown. Estimate M from this data. (c) The business wants to start feeding the lizards vitamins from…
John and Peter are two representative consumers/investors who maximize the utility of consumption. John's utility of consumption is characterized as ln(x) + 2ln(y) while Peter puts more weight on the current consumption level and has a utility function of 2ln(x) + ln(y). John has a wealth of ($10, $20) thousand, while Peter has a wealth of ($20, $15) thousand now and next year, respectively. (a) What are the optimal consumption plans forJohn and Peter,respectively,if the interest rate is 5% per annum? (b) If John and Peter are the only investors/consumers, what is the equilibrium interest rate? (c) Further to part (b), how much do they borrow or lend to each other?
Case: As part of the most recent collective bargaining agreement with employees, an employer must offer medical insurance at "reasonable, non-profit rates." The employer plans to self-insure in place of using a private insurance company. Statistical evidence suggests that the average household currently spends $450 per year for medical bills and $80 for health screening and routine check-ups. Administrative costs are expected to average $30 per family. The collective bargaining agreement dictates that the plan's coverages and rates be fixed for a period of two years. The auditor considers the choice of the plan to be extremely important. Consequently, the auditor has asked you to evaluate the three proposals listed below. Proposal A would charge a $350 premium with no deductible. Coverage is extended to pre-existing conditions, but to cover the non-deductible clause, health screening and routine check-ups are not covered. Proposal B charges a $250 premium with a $200…