Chapter 1 2
This presentation is the property of its rightful owner.
Sponsored Links
1 / 24

CHAPTER 1 & 2 PowerPoint PPT Presentation


  • 69 Views
  • Uploaded on
  • Presentation posted in: General

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.

Download Presentation

CHAPTER 1 & 2

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Chapter 1 2

CHAPTER 1 & 2


Survey

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


Survey1

Survey

  • 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.


Chapter 1 2

  • 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.


Survey2

Survey

  • 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.


Chapter 1 2

  • 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.


Survey3

Survey

  • 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?


Survey4

Survey

  • 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.


Chapter 1 2

  • 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.


Survey5

Survey

  • 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.


Chapter 1 2

  • 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.


Survey6

Survey

  • 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.


Chapter 1 2

  • 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

Results

  • 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

Results from Others

  • 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

The Results of the Survey

Percent Choosing A or B.


Survey when scarce item is health related

Survey When Scarce Item is Health Related

  • 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

Health

Percent Choosing A or B


Questions from survey

Questions from Survey

  • Why is the public so wary of price?

  • Why does the public favor government?

  • Why do economists favor price?


Focus on what each mechanism would mean if applied to everything

Focus on What Each Mechanism Would Mean if Applied to Everything

  • 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

Random Applied to Everything

  • Would you have an incentive to work?

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


What if government allocated everything

What if Government Allocated Everything

  • What would your incentive be in this case?


Survey7

Survey

  • Is the first come first served system fair?

  • Is the govt scheme fair?

  • Is the random fair?

  • Is the price system fair?


  • Login