Economics 236: Health Economics and Policy Group Assignment 1
Problem Assignment:
Here are some critical questions for our class discussion regarding the Demand for Medical Care. For each one of the following questions you should be able to communicate to an audience all important relevant information in a well-organized and concise way. Make sure that you are ready to present enough detail.
1) The determinants of demand for medical care: What changes the demand for medical care? Be prepared to present a long list of determinants and explain in a graph how each one affects the demand. Distinguish between movement along the demand curve and shifts of the whole curve.
2) The aggregate demand curve for medical care: How do we derive the aggregate (joint) demand when we have the individual demand curves for two individuals? Be prepared to explain the horizontal addition of the two curves with a graph.
3) Healthy versus sick: Explain how a sudden illness can change the shape of the indifference curves for medical care and all other goods. Draw two intersecting indifference curves and explain which one would belong to the healthy and which one to the sick person and why. (Tricky question! Hint: Consider how much the sick and healthy individuals are willing to give up in medical care to get an additional unit of all other goods.)