Consider the Grossman model of demand for health and answer the following questions:

1. Assume that price of medical care increases. How would this impact the optimal health stock of optimal health capital? Use a graph to depict the movement in health stock from initial health stock (H*) to the new optimal stock of health capital (H**). Explain.

2. Assume an individual decides to improve their living environment by moving from rental accommodation to their own home. Use a graph to depict the change in health stock assuming the MC remains the same. Explain