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Exam Questions

Exam Questions. You all know the drill about honor, honesty, not cheating, etc. on exams. Please be honorable, and not let things get dishonorable. Answer all of the questions with enough detail to convince me that you are brilliant. ECO 7550. Question 1.

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Exam Questions

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  1. Exam Questions You all know the drill about honor, honesty, not cheating, etc. on exams. Please be honorable, and not let things get dishonorable. Answer all of the questions with enough detail to convince me that you are brilliant. ECO 7550

  2. Question 1 • Consider teeth from a health capital point of view. • (5 points) In what ways do we consider teeth to be capital goods (like machines), allowing their analyses with health capital models. • (5 points) Draw a health investment diagram that shows the optimal investment in teeth over (let’s say) a 10 year period. Why might it vary from year to year? • (5 points) How has technology influenced the longevity, care, and maintenance of “tooth capital?” • (5 points) Discuss the role of time in the production and maintenance of “tooth capital”.

  3. Question 2 • Jason Check talked about recent debates in the production and marketing of drugs. Here are some questions about his talk. • (5 points) Discuss briefly the topic of Jason’s presentation relating to the quest for profit in the drug industry and in drug retailing. • (5 points) Why does our system allow drug manufacturers monopoly power through the patent system? • (5 points) What would we expect to have happen to drug prices when a patent on a particular drug “ages out” (that is, it is no longer in effect)? • (5 points) Construct an argument that would suggest that price “gouging” may lead to the development of new and better drugs.

  4. This graph is to scale. Question 3 Steve • Adam produces QALYS according to QA = A/4 Steve produces QALYS according to QS = 4S½ where A + S = 100 • (5 points) Draw a production possibility curve for this problem. Label your axes carefully. • (5 points) Calculate and show the most cost-effective production point. • (5 points) Calculate the amounts of QALYS if we require that QA = QS. • (5 points) Some argue that QALYs should be discounted like financial returns. Give an argument in favor and an argument against. 0 Adam

  5. Question 4 • We went through a series of demand exercises. Here are some questions. • (5 points) In our models, why do we distinguish between monetary income and full income? What decisions cause them to differ? • (5 points) In our models, increases in dividend income cause people to work less. Why does this occur, even though the price of leisure has not changed? • (5 points) Derive an expression for income elasticity of demand. If income rises by 14% and health expenses rise by 11%, what does that say about the income elasticity? What does it say about the change in share of resources going to health care? • (5 points) In our simple models full price elasticity is less than money price elasticity. Explain (by example if necessary) why this is the case.

  6. Obesity • The BMI is a measure dividing weight in kilograms by height (in meters) squared. • (5 points) Discuss the scaling of the BMI and the various categories related to levels of BMI. • (5 points) Discuss strengths and weaknesses of BMI as a “screening” device for obesity, particularly with the ideas of sensitivity and specificity. • (5 points) How might the BMI give us “false positives” as an obesity measure. What might be done to address such false positives? • (5 points) Assuming that French Fried potatoes influence the BMI, discuss the potential impact of a 50% tax on French Fries.

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