1. Determinants of Health What are determinants of health? Explain why medical care may not be the only Or most important factor that promote health. (Please refer to the Milton Romer's "Determinants of Health" Model)

2. Indifference Curve and Budget Line (20%) Annie has an income of $120 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack of energy drink

a. Draw a graph of Annie's budget line with six-pack of energy drink on the x-axis, and popcorn on the y-axis.

b. What is the slope of Annie's budget line ? What could this slope be also called?

c. If we know that Annie maximizes her utility with the purchase of 20 bags of popcorn, how many six-pack energy drink she will purchase?-(an estimate from your graph & actual calculation) , draw an indifference curve reflecting this optimum.

3. Income Effect & Substitution Effect - (still use budget line with energy drink on the x-axis, and popcorn on the y-axis). If Annie's hourly income remains $120. The price of energy drink is on sale and drops to $2 a six-pack of can energy drink, while the price of popcorn remains at $5 a bag.

a. Draw the new budget line(s) (with energy drink on the x-axis, and popcorn on the y-axis)

b. Use indifference curve to identify the change in quantity purchased

c. and illustrate the income effects (points and distance) and substitution effects (points & distance)