| December 30, 2014


Paper instructions:
This is the text book Jacobs, P., & Rapoport, J. (2004). The economics of health and medical care (5th ed.). Sudbury, MA: Jones & Bartlett Publishers.

1.    Complete and submit the following exercises from the course text.
o    Chapter 4:  Pages 92-93, Exercise #4
o    Chapter 5:  Page 119, Exercise #2
o    Chapter 6:  Pages 143, Exercise #4

Chapter 4:  Pages 92-93, Exercise #4
4 Mrs. Siegal has two alternative activities to help relieve her backache. In the first, she can visit a physiotherapist. The total time for a physiotherapist visit, including travel and waiting, is two hours. Mrs. Siegal earns a wage of $20 an hour. Physiotherapists charge $50 per visit, and Mrs. Siegal does not have any health insurance. As a second alternative, Mrs. Siegal can take pain killers. Each pill costs 50 cents, and Mrs. Siegal needs to take 30 pills per month. The two treatments are not equally effective. The physiotherapy visits yield 10 additional healthy days per month, while the pills yield 6 healthy days.

a. If Mrs. Siegal can only choose one alternative, and if she wants to maximize the most healthy days per dollar that she gets, which option will she choose?
b.If the price of a pill increases to $3, which option will she choose?

Chapter 5:  Page 119, Exercise #2
2 Sweetgrass Radiology Labs has a fixed amount of radiology equipment. The laboratory can hire any number of radiology technicians per hour to produce radiographs, which are displayed on a screen. The relationship between the number of technicians hired per hour and the number of radiographs produced per hour is shown in the following table. Show the total and marginal products and indicate at each level of production whether the production function exhibits increasing, constant, or diminishing marginal productivity.
Radiograph Technician per Hour        Radiograph Produced per Hour
1    10
2    26
3    50
4    74
5    94
6    100

Chapter 6:  Pages 143, Exercise #4
a. Determine the marginal cost for each level of output.
b. If the price per visit is given to be $25, at what level of visits will the maximum profit position be? What are the profits at this level? What is the quantity supplied?
c. If the price per visit increases to $45, what will be the quantity supplied (assuming maximizing profits)?
The following is a cost function for clinic visits in a small inner city clinic:
Quantity of Visits                                                                    Total Cost per Week
0    10
1    15
2    25
3    45
4    75
5    115
6    165



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