Public health information can be broadcast at a cost of $100. Public health info

Question

Public health information can be broadcast at a cost of $100. Public health information is a pure public good, in that many people can use the information simultaneously and preventing people from using the information is very difficult. One group of residents has a demand curves for public health information of the form Q = 50 - P. Here Q is the number of public health broadcasts per month and P is the price per broadcast. Another group has a demand curve of Q = 140 - P. ( 2 pts)

At a price of $100 per broadcast, how many broadcasts per month will be demanded (Add the quantities demanded by each group.)

1. What are the external effects of vaccine?
2. Would to few people be vaccinated if it weren’t mandatory? What evidence supports your conclusion?
3. What steps do governments take to increase vaccination rates?
4. What steps do private companies take to increase vaccination rates and why?

Two clinics want to merge. The price elasticity of demand is -0.20, and each clinic has fixed costs of $60,000. One clinic has a volume of 7,200, marginal costs of $60, and a market share of 2 percent. The other clinic has a volume of 10,800, marginal costs of $60, and a market share of 4 percent. The merged firm would have a volume of 18,000, fixed costs of $80,000, marginal costs of $60, and a market share of 6 percent. (5 pts)

            What are the total costs, revenues, and profits for each clinic and the merged firm?

.

            How does the merger affect markups and profits?   

Give an example of a healthcare product that is financed by the government but produced by private firms? Can you explain why this arrangement exists?

Explanation / Answer

1. When the quantity demanded given by the demand function is in negative, we take it as zero. So when the price is $100, group 1 demands zero units. On the other hand, group 2 demands 40 (=140-100) units. Total quantity demanded is 40 units.

External effects of vaccine: As more and more people get vaccinated, the chances of the spreading of virus decreases and the society get more safe. This means that there is a marginal social benefit associated with vaccine.

If vaccine weren't mandatory, the vaccination rate would depend only on marginal private benefit, not on the marginal social benefit. This means that the marginal private benefit (which is lower than the marginal social benefit) will work as the demand curve and the market output will be lower than the socially optimal output. In this case, we say that the good is undersupplied.

To increase vaccination rates, governments subsidize vaccination, makes vaccination mandatory by penalizing those who do not get vaccinated, subsidizes reseach that has the potential to make vaccination less costly.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.