Assignment
Instructions: In a typed document, answer 5 of the 6 questions below. IF YOU ANSWER MORE THAN 5, only the first 5 will be accepted. You may use any of your notes, the book, and/or the internet. Be as thorough as possible when answering but make sure to stay on topic. You may draw graphs with your answers, but they are not required. Limit all answers to 250 words.
1. Assume the supply of physicians is perfectly, or close to perfectly, inelastic (which is normally is):
a. Why is this?
b. What will an increase in the demand for being healthier lead to in the market of physicians? Make sure to discuss the price and/or quantity changes that will occur as demand for physician's increases in the short run (ie less than a year).
2. It is a workday and you are feeling ill and are considering whether or not to go to the doctor and take off of work OR to go into work and skip the doctor. In order to decide which course of action to take, you perform a Cost-Benefit Analysis (CBA). Describe the process you would take in your analysis (make sure to discuss ALL ranges of costs and benefits).
3. Assume that there exists some vaccine that is very limited in supply, but for which there is a high demand. If the goal is to maximize the total benefit of those treated, how should physicians determine who gets the vaccine (hint: your discussion should involve some mention of the "flat of the curve")?
4. Using moral hazard as the main basis of your reasoning, explain why having insurance leads to more use of heath care goods and services than is economically desirable. Assume your behavior relating to getting sick/injured does not change.
5. Explain the role of a manager in a Preferred Provider Organization (PPO) (which is a managed care plan). In your discussion, make sure to discuss transactions between ALL parties that the manager manages (HINT: You answer should focus on the specific attributes of a PPO).
6. A cardiologist gets paid much more than a general practice physician. Explain why this is. Make sure your discussion includes differences in skills, information symmetry, time, and risk between each field.