Draw a production of possibilities curve for an economy that produces two goods, health and entertainment. Show how this PPF would change if the technology for improving peoples health was to improve. Show the change if there were an increase in the underlying available quantities of capital and labor.

Next, draw a production possibilities curve between health and all other goods. Insert a point in the drawing that illustrates an economy with an inefficient health system. Insert two additional points that illustrate two efficient economies, but two that contrast in their relative emphasis on healthcare versus all other goods. Is there a cost to society of policies that lead to increases in healthcare? Explain.