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# CHAPTER 1 & 2 - PowerPoint PPT Presentation

CHAPTER 1 & 2. Survey. For each of the following questions choose one of the following answers: a. completely fair b. acceptable c. unfair d. very unfair e. totally unacceptable. Survey.

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## PowerPoint Slideshow about ' CHAPTER 1 & 2' - merrill-parsons

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• For each of the following questions choose one of the following answers:

• a. completely fair

• b. acceptable

• c. unfair

• d. very unfair

• e. totally unacceptable

• At a sight-seeing point, reachable only on foot, a stand selling bottled water has been established. The bottled water is sold to thirsty hikers.

• The price is one dollar per bottle. Early each morning 100 bottles are carried up the hill.

• On a particularly hot day 200 hikers want a bottle of water. How do you evaluate the following means to distribute the water among the hikers.

• 1. Raising the price on the water until the number of hikers willing and able to purchase the water equals the water available.

• 2. Allocating the water on a first come first serve basis at \$1 per bottle.

• 3. The government buys the water at \$1 per bottle and gives it to whom it wants

• 4. Having the hikers enter a lottery to see who gets the water.

Survey willing and able to purchase the water equals the water available.

• A physician has been providing medical services at a fee of \$100 per patient and typically services 30 patients per day.

• One day the flu bug has been so vicious that the number of patients attempting to visit the physician exceeds 60.

• Please indicate how fair you consider the following means to distribute the physician’s services among the flu victims.

• 1.A price increase until the number of patients willing and able to pay the price equals the number of patients the physician will see.

• 2.Selling the services at \$100 per patient on a “first come, first served” basis.

• 3.The local authority (government) pays the physician \$100 per patient and chooses who is to receive the services.

• 4.Selling the patient services for \$100 per patient following a random procedure such as a lottery to determine who receives the services.

Survey able to pay the price equals the number of patients the physician will see.

• A physician has been providing medical services at a fee of \$100 per patient and typically services 30 patients per day.

• After purchasing a blood analysis evaluator for \$100,000, the physician raised the price to \$200 per visit.

• How do you evaluate this price rise?

Survey able to pay the price equals the number of patients the physician will see.

• There are many more kidney patients needing new kidneys than there are kidney donors.

• Please indicate how you evaluate the following means to distribute kidneys among the patients.

• 1.Potential recipients buy the organs from donors, paying a price sufficient to equalize the number of kidneys needed and the number provided.

• 2.Allocating the organs on a “first come, first served” basis.

• 3.The government pays for the operations and provides the organs according to its own allocation scheme.

• 4.Providing the organs according to a random procedure such as a lottery.

Survey price sufficient to equalize the number of kidneys needed and the number provided.

• AZT is the only pharmaceutical to date that effecitvely retards the onset of AIDS once HIV has been contracted.

• Only one company produces the drug, Burroughs-Wellcome.

• Burroughs-Wellcome can produce only 100 thousand capsules a day but the daily need is 300 thousand capsules.

• Evaluate the following means to distribute the capsules.

• 1.Burroughs Wellcome raises the price until all those willing and able to pay the price get AZT.

• 2. The capsules are sold on the basis of the length of time a patient has had the HIV. Everyone pays the same

• 3.The government purchases the capsules from Burroughs-Wellcome and provides according to its own allocation scheme.

• 4.AZT is provided to a fixed number of people at a constant price according to a random procedure such as a lottery.

Survey willing and able to pay the price get AZT.

• There are many more students wanting to get into ASU’s College of Business than there are spots available.

• Please indicate how you evaluate the following means to distribute openings among the applicants.

• 1. The price of admission is increased until the number of students willing and able to pay the price get admitted.

• 2.Allocating the openings on a “first come, first served” basis.

• 3.The administration decides who gets in.

• 4. Drawing in a lottery where winners get admitted to the College.

Results students willing and able to pay the price get admitted.

• You have selected A, B, C, D or E for each question. Look at each question 1: How many A’s do you have? How many B’s, C’s, D’s, E’s?

• Now look at each question 2, how many A,B,C,D or E?

• Now look at each question 3, how many A,B,C,D or E?

• Now look at each question 4, how many A,B,C,D or E?

Results from Others students willing and able to pay the price get admitted.

• A survey of three groups -- the general public, MBA students, and economists -- have taken this survey over time. Here are their responses.

The Results of the Survey students willing and able to pay the price get admitted.

Percent Choosing A or B.

Survey When Scarce Item is Health Related students willing and able to pay the price get admitted.

• When the item that is scarce is related to health -- such as physician services, health insurance, organs, AZT, or others -- the survey results are different.

Health students willing and able to pay the price get admitted.

Percent Choosing A or B

Questions from Survey students willing and able to pay the price get admitted.

• Why is the public so wary of price?

• Why does the public favor government?

• Why do economists favor price?

• First Come First Served

• Would you have an incentive to work

• What would you do with your income?

• How would you attempt to increase your quality of life?

Random Applied to Everything Everything

• Would you have an incentive to work?

• What, in fact, would you have an incentive to do?

What if Government Allocated Everything Everything

• What would your incentive be in this case?

Survey Everything

• Is the first come first served system fair?

• Is the govt scheme fair?

• Is the random fair?

• Is the price system fair?