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a.Suppose the government imposed a $60 price ceiling to make the product more affordable. Explain why this would not help all patients who benefit from this product.Making EpiPens $60 won’t help patients because price changes do not change supply and donot shift supply curves. If the government puts a cap on the price, taking the potential profit margins away from producers of EpiPens, then the producers might produce less product causing shortages. Also, less profit could lead to less investment s for research into improvements. Also, if the companies can’t compete in the market, they may just stop making them.b.Suppose the government did not intervene and simply allowed the EpiPen producer to keep their prices high in order to maximize profits. Explain what impact the high profits would have on this market in the long run.
HIMT 365The EpiPen is not a commodity that people just want or does not want; it’s a medical necessity that could save someone’s life. If there are several companies producing a product,they become competitive; if companies think there is a profit to be made they will get into the market to produce this item. Once several companies start to sell identical items that makes is harder for their competitors to get their share of the profits. This can cause those competing companies to change the way they think and try to make more money with higher sales and lower profits margins. This may cause lower prices been passed on to buyers. c.Based on your answers to parts a and b, explain whether you think the government should intervene to force lower prices for EpiPens.I don’t think the government should intervene. Hopefully more companies will get into the market, make the product cost less because of competition, otherwise the EpiPen makers will continue to create a monopoly on the product. 3.(15 points) Suppose a cost-benefit study is conducted to measure the impact of prenatal vitamin usage to improve birth outcomes and long-term health of children. The costs are incurred during pregnancy, while the benefits extend over a long time-frame. Suppose further, that the researchers conclude that prenatal vitamins are cost-effective using a 2% discount rate. However, most cost-benefit studies use a discount rate of 3-5%. Explain whether the use of a lower than typical discount rate makes these results more convincing or less convincing.When discounting at a higher rate, we place less value on the future benefits, so discounting at a 2% rate says the benefits exceeds the costs, even if we place less value on the benefits. So I would say that discounting at a lower rate would show a more convincing argument. 4.
HIMT 365(15 points) Suppose there are a number of treatment options for a specific, life-threatening medical disorder. The treatment costs and expected QALYs gained are given for each treatment option below:TreatmentCostsQALYs GainedA2502.6B2003.0C00D2804.4E3405.2a.Identify all dominated treatment options and explain why each is dominated.