Question 1: Grossman model

1. (5%) Scientists discover a new drug that eliminates the steady deterioration of health caused by aging and it is offered for free. Individuals can still suffer from other health events such as diabetes, heart attacks, accidents, etc. According to the Grossman model, will individuals invest more, less, or the same in their health in terms of money, time, or effort?

2. (10%) Alternatively, a new vaccine eliminates the probability of contracting a specific strand of a Sexually Transmitted Disease (STD). How will individuals react? How is the health of the population affected? Do other strands of the STD become more or less prevalent? Is their reaction similar to the discovery of the new drug that eliminates the effects of aging? Why or why not?