This is health economics quiz i need a detailed answers please

1. Competition and Hospital market {20%} The demand of hospital care at Town A is P = 15- X, wherep is the price of a hospital service, and .t' is the quantity of services demanded by patients. Suppose there is only one hospital with the cost function E = 20 +532. {a} Assuming that this hospital cares only the profit, compute the optimal price and quantity for hospital B. [596] (b) What is the I-lI-II index based on output'}I {5%} Suppose that this hospital is a nonprot hospital which has an incentive to provide as much health care as possible. {c} Write down the zero-prot condition for this hospital (5'36) J{'Hint: TR=TC} [d] Cmplltl: the price and quantity that this hospital would charge under zero-prot condition (5'36) 2. Physician-induced Demand {20 points} Consider the following physician utility: =m.o5t2 where at he the dollars per unit of service, J: be the total unit of provided service, and i indicates the inducement that the physician takes to inuence the patient's demand. It is believed that the relationship between it andi can be written as: x: -.2m+i}.2i {a} Suppose the fee per unit of service is ID. Please calculate the optimal inducement [i] and demanded service [it] for the physician. [5%) (b) Now the govemment announced a fee reduction from II} to 5, how does the foe reduction affect the inducement? 1|What is the optimal demanded service {it}? (5%} {c} According to [h], what portion of the change of x is due to the change of inducement? [5%] [d] According to {c}i explain why it is empirically difficult to use the changes of demanded service after fee reduction as the evidence of P111 Please explain carefully {5%} {e} Empirically testing the physician induced demand follows closely the model of McGuire and Pauly {1991}, where they employ two markets {senioes} to identify PID. Can you explain the intuition why two markets {senioes} would help identifying PIE? {5%} 3. Brand-name and Generic Drugs {25%) A pharmaceutical company E consist in developing the new drug K. The annual demand of the new drug K is x = Sit-2p+ where p is the price of a prescription dnlg+ and r is the quantity demanded by patients. For simplicity, assume that company B can produce the new drug an extra pill at a constant cost, and hence the marginal cost function is MC=4. {a} How much Comp B should charge for the price of Drug K? What is the annual prot'}.l Please explain carefully [5'36] Suppose the demand for Drug K comes from two towns: Al and A2, where xl=2-p and 12:1{l-p is the demand for each town separately (h) Suppose that l[Zomp E can charge different prices for each town. How much should Comp B charge for the new drug at Al and A2 respectively? Please explain the answer carefully (5%) {c} Comparing (h) with {a}, which one has a higher price at Town A1? Please use this result to explain why some branded name drugs charge an even higher price after the expiration of patent. (5'36) The government grants the new drug's patent for three years. After three years, it is assumed that a generic drug would enter the market that could drive the market price near the marginal cost. [:1] Assume patients in Al have no interests in generic drug+ and those in A2 treat the new and the generic drug as indifferent [two drugs share the market equally}. What is the annual prot of Comp B from Al and A2 respectively after patent:I Please explain careilly {5%} {e} The president of Comp B has decided to develop Dmg K if the company could recoup all the as: D cost [approximately 35D) within ve years. Based on these numbers. please help him decide whether he should invest the new drug {5% interest rate when calculating the present value} {5%} (Hint: the new drug will be granted for patent in the rst three years} 4. CEA and CBA (25%) Paul fell off his bike and damaged his neck. Without treatment his quality of life (QOL) per year is expected to be 0.75 for the rest of his life (five years). Paul has the following two treatment choices: Neck surgery: Costs $4,000 immediately and increases Paul's Qol to 1.0 for the remaining life (four years) Physiotherapy: Costs $1000 per year (at the beginning of each year) and increases Paul's QOL to 0.8 for five years. Assume a discount rate (r) of 5% per annum (a) Calculate the QALYs for each treatment (5%) (b) Conduct the CER (cost and effective ratio) and help Paul decide which treatment to take (5%) Paul is more inclined to have the surgery, but he hopes to conduct the cost and benefit analysis to confirm this choice. (c) It is reported that the chance of saving one person from the airbag is one out of 10000 and the cost of one airbag is 500. From these two numbers, please calculate the value of statistical life. (5%) (d) Please write down the marginal benefit and cost of doing the surgery in the last five years. (5%) (Hint: compare with no treatment) (e) Suppose that the value of one year of life (undiscounted) is 50000. Use the cost and benefit analysis to help Paul decide whether he should have the surgery (5%) 5. Single Choice Questions (10%) I. Which following country has the highest health expenditure (in terms of GDP) (a) Taiwan (b) Japan (c) France (d) United States II. According to J. DiMasi, R. Hansen, and H. Grabowski, "The Price of Innovation: New Estimates of Drug Development Costs", Jan 2002, how much does it cost to produce a new drug? (a) 100 millions (b) 400 millions (c) 8 millions (d) 12 millions III. Which number is a more reasonable estimate of statistical life in US? (a) 1 million (b) 5 millions (c) 10 millions (d) 20 millions IV. On average, how long does it take for a new drug to complete the clinical testing? (Phase 1-III) (a) 3 years (b) 7 years (c) 10 years (d) 15 years V. What was the life expectancy in Taiwan around 1920? (a) 40 years (b) 50 years (c) 60 years (d) 70 yearsSource material: some problems affecting the Greek economy Greece fact file 2015 Population 10.8 million % Population over 60 years old 27% Unemployment rate 249 Net migration -44 905 Greece is the country that was worst affected by the European financial crisis that began in 2008. From the start of the crisis, no other European economy had such a large percentage fall in GDP. Greece's GDP fell by 9% in 2011. One reason for this was a very strong foreign exchange rate. Since 2014, other European economies have recorded positive economic growth rates. Among the reasons for this were successful supply-side policy measures and an improving global economy. The Greek government introduced market-friendly measures, including privatisation and labour market reforms. These measures brought back some investors and moved the Greek economy closer to a market economic system. However, Greece's output still fell. This may be due to the fact that none of the government policies have managed to change population trends. The Greek population has been falling since 2010. Greece has the third most rapidly ageing population in the world, behind Japan and Italy. The economy has not made good use of its older population because a significant percentage of workers retire earlier than the national retirement age of 67. For example, 74% of employees in the public sector retire before 61 years old. In addition, the crisis also led to high levels of emigration. However, those living on some Greek islands have escaped the effects of the crisis. Income from tourism has continued to flow into the islands. An island called Ikaria has also managed to gain international attention as one of the healthiest places in the world. Approximately 30% of the people who live on this island, live until they are over 90. Health problems are also much less frequent than those living elsewhere. Overall, however, Greece has managed to improve its Human Development Index (HDI) value as shown in Fig. 1. 30 000 0.868 25 000 0.866 20 000 0.864 0.862 GDP per head ($) 15 000 HDI value 0.860 10 000 0.858 5000 0.856 0- 0.854 2010 2011 2012 2013 2014 2015 Year GDP per head ($) .......... HDI Value Fig. 1 Greece's GDP per head ($) and HDI value from 2010-2015 UCLES 2020 0455/23/M/J/20 Buy O / A Level & IGCSE Original Books, Solved Past Papers & Notes Online at Discounted Prices. Home Delivery all over Pakistan Call / WhatsApp: (0331-9977798) Visit: www.TeachifyMe.com/Shop 3 Answer all parts of Question 1. Refer to the source material in your answers. 1 (a) Calculate the total number of people over 60 years old in Greece in 2015. [1] (b) Explain what is meant by an unemployment rate of 24%. [2] (c) Identify two reasons for the recovery of the European economies, other than Greece. [2] (d) Explain the two supply-side policy measures being used by the Greek government. [4] (e) Analyse how two of Greece's population trends may have affected its economy. [4] (f) Analyse the relationship between Greece's GDP per head and its HDI value. [5] (g) Discuss whether or not having a strong foreign exchange rate is a problem for Greece's economy. [6] (h) Discuss whether or not a market economic system improves living standards. [6]