Health Economics €“ ECO 386

1) {distribution of health expenditures} Ranking everyone by the amount spent on
medical care, 30 percent ofthe total [all expenditures for all people) is accounted for
by the top 1 percent of patients. Take the overall average per capita personal health
expenditure and determine how much on average is spent on each of these high-cost
patients. The top half ofthe population accounts for 90 percent of total spending.
What is the average amount spent on the remaining people in the bottom half ofthe
distribution? Is the median [i.e., amount spent on the person who is at the middle of
distribution, with half of all people spending more, and half of all people spending
less) higher or lower than the mean?
2) {manpower} Which has increased more rapidly since 1929, the number of
physicians or the number of ancillary health workers? As medicine becomes more
technologically advanced, which will grow faster, the number of more-skilled
workers or the number of less-skilled workers?
(hint: For the previous two questions use the tables in chapter 1 of Getzen’s book)
3) What determines the value of a knee brace? How can an economist maintain that
I am better off if] paid $7,000 for an operation that made my twisted knee worse
rather than better?
4) lfthe price of office visits increases from $20 to $22, and the number ofvisits per
family per year declines from 12 to 10, what is the arc price elasticity of demand?
5) In the year 2005, in Anytown, suppose that one person is willing to pay $1,000 for
relief from hay fever; another two are willing to pay $350; about five more are
willing to pay $50; one is willing to pay $40; one is willing to pay $35; one each is
willing to pay $34, $32, $30, and $28; about a dozen are willing to pay $10; four are
willing to pay $5; and half of the rest of the town [another 75 people) are willing to
pay $1.
a. Draw the demand curve for hay fever relief in Anytown.
b. What is the potential total benefit from relief of hay fever if it is provided to
everyone who asks? To everyone willing to pay $35 or more?
c. lfthe price of hay fever medication is $20, what is the quantity demanded? What
is the quantity demanded if the price is $50? $5?