Week 2 Assignment - Week 2 Assignment Income Risk and Consumer Demand for Healthcare Kimberly Denise Devlin Week 2 AssignmentIncome Risk and Consumer

Week 2 Assignment - Week 2 Assignment Income Risk and...

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Week 2 Assignment: Income, Risk and Consumer Demand for Healthcare Kimberly Denise Devlin Week 2 Assignment—Income, Risk and Consumer Demand for Healthcare AH 511—Health Service Management Instructor: Omar Gafford Week 2 Assignment: Income, Risk and Consumer Demand for Healthcare Page 1
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Week 2 Assignment: Income, Risk and Consumer Demand for Healthcare 1.Why is the depreciation of capital good a cost of society? In what ways does a person’s health depreciate? 2. Why might older people’s healthcare expenditures increase in the Grossman model even though their desired health stocks may be lower? According to Grossman’s model, optimal level of investment in health occurs where marginal cost of health capital equals to marginal benefits. In addition, optimal health stock is affected by age, wage and education. Health depreciation increase with age, it therefore it becomes more costly for old people to attain same level of health capital stock consequently, the optimal health stock and marginal benefits of health decreases. Consequently, the amount of the treatment demanded is effectively lowered
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