Reference no: EM133202794

Assignment:

1. Consider testing of chemicals for potential carcinogens. To properly test each chemical costs $100 million. If Q chemicals are tested a typical household places marginal value $(10 - 0.05xQ) on the Qth chemical tested. There are 100 million households in the U.S.

(a) Calculate the social marginal benefit schedule.

(b) Hence give the optimum number of chemical tests that should be sponsored by the national Institutes for Health.

2. (a) Explain the economic problem that arises due to externalities.

(b) Give an example of a health externality.

3. Both Medicare and Medicaid are public programs to finance health care services for identified populations. General reasons for government involvement in economic activity include provision of social insurance and income redistribution.

(a) Which is more clearly social insurance?

(b) Would it be possible for both to operate from a social insurance model?

(c) What would need to change?

4. (a) Are the returns to medical expenditures higher in low-income countries or in high-income countries? Explain your answer.

(b) Are the returns to medical technology in the United States felt to be worth the cost? Explain your answer.

(c) Do variations in practice styles across regions in the United states suggest that medical technology is overused? Explain your answer.