QUESTIONS BASED ON WEEK 2 MATERIAL:
1.If the price of a typical weekly supply of groceries went up by 2% during 2009, and
weekly consumer purchase of supermarket goods went down by 3%, what is the price
elasticity of demand for groceries? Is this value of
Econ 240 Section 001
Economics of Health Care Systems
Winter Term, AY 2010-11
Tues-Thurs, 4:00 pm to 5:50 pm
Bellet Building 103-104, Hahnemann Campus
SYLLABUS (4 pages)
Professor: Patricia Awerbuch, MBA
Email: patricia.awerbuch@verizon.net (Please use th
Probabilities have values between 0 and 1
0< p <1
the value of 0 means that the event dos not happen at all. A value of 1 means the the
event happens with certainity. Values inbetween are fractional, and represent the
proportion of times that the event do
Econ 240: Terms and Concepts 6:
TIME VALUE OF MONEY
If I put $100 in the bank today, and it earns interest every year, at the end of 10 years I will have more
than $100. And if I leave the interest to accumulate, so that each years interest earns interest
Econ 240: Terms and Concepts 5
INSURANCE PREMIUMS
Insurance premiums are determined as per capita Expected Values; that is, they are obtained by multiplying a
probability times a cost.
The notion of a fair premium is one determined by the prevalence rate
Insurance
A fair premium- a premium is calculated as an expected value. (prevalence of
illness) X (cost)
+ loading factors (administrative costs)
+ rated premium (conditional p) (increased cost)
+ adverse selection- prevalences amond insured is higher tha
Econ 240: Terms and Concepts 4
Cost Utility Ratios for Comparing Two Treatments: Logistic Analysis
Raw Data: reporting the recurrence of cancer in patients two received two different treatments.
30 subjects received Treatment A, and 37 subjects received T
Econ 240: Terms and Concepts 3
The question we are trying to answer is: How much should we pay to reduce illness, or the risk of
illness, by x%
Marginal Costs and Marginal Benefits are measured as the change in probability of occurrence resulting
from tre
Econ 240: Terms and Concepts 2
opportunity cost - the value of a resource in its next best alternative use.
This is THE measure of cost in Economics for decision-making purposes. Instead of considering how
much a particular resource costs by itself (its d
Econ 240: Terms and Concepts 1
Demand for
Factors
$ Cost
The Circular Flow Model
Factor Markets
land, labor, capital
entrepreneurship
BUSINESS SECTOR
Supply of
Product
$ Incomes
HOUSEHOLD SECTOR
Productivity
$ Revenues
Supply of
Factors
Utility
Product Ma
Econ 240: Homework 6
1. (a) The lab earns 3% return on its income. First calculate the present value of each of the five years of
benefits under each option, using the discount factors given in your T&C.
Present Value = Future Value x Discount Factor
Opti
Econ 240: Homework 5
Multiple Choice
1. A future value represents which of the following:
b. the value of a fund at the end of a time period when interest has been earned
2. A present value represents which of the following:
a. the amount that would have
Econ 240: Homework 4 Solutions
1. Two drugs for high cholesterol are available, one costing $160 per year, and the other costing $1460
per year. The very expensive drug is very expensive because it does not cause stomach problems,
whereas the cheaper drug
Econ 240: Homework 3 Solutions
Problem 1:
A cancer hot spot appeared in a county in Louisiana, and investigation revealed that a nuclear waste
disposal contractor had been selling waste to a construction company that mixed it with asphalt and used
it to p
Econ 240: Homework 6
(The table of interest factors is repeated on the last page)
A repeat of one of your earliest problems, now using discounting:
1. A laboratory needs to expand, and they have a choice between purchasing two new microscopes to be
used b
Econ 240: Homework 5
Multiple Choice
1. A future value represents which of the following:
a. any income that you expect to be paid at some time in the future
b. the value of a fund at the end of a time period when interest has been earned
c. the value of
Econ 240: Homework 4
1. Two drugs for high cholesterol are available, one costing $160 per year, and the other costing $1460
per year. The very expensive drug is very expensive because it does not cause stomach problems,
whereas the cheaper drug has a 0.6
Econ 240: Homework 3
Problem 1:
A cancer hot spot appeared in a county in Louisiana, and investigation revealed that a nuclear waste
disposal contractor had been selling waste to a construction company that mixed it with asphalt and used
it to pave roads
Econ 240: Homework #2
Calculating Opportunity Cost using quantities:
1. You have building space that will be used as a laboratory, and you have a choice what kind of
laboratory you will put into the space. If you use the space to run blood tests, you can
Mariah Brant
Econ 240: Homework 1
See syllabus for due date
1. A market exists when:
a. there is a building where buyers and sellers can exchange physical goods
b. there is a voluntary exchange of something having measurable value, good or service
c. ther
Econ 240: Homework #2 Solutions
1. You have building space that will be used as a laboratory, and you have a choice what kind of laboratory
you will put into the space. If you use the space to run blood tests, you can run 80 blood tests in a day. If you
u
Econ 240: Homework 1 Solutions
1. A market exists when:
b. there is a voluntary exchange of something having measurable value, good or service
2. What is exchanged in a product market?
a. final goods and services
3. What is exchanged in a factor market?
b
The Final Exam covers the material in T&C 5 and 6 - Insurance and Discounting
Definitions:
Fair Premium- 5 a premium is calculated as an expected value. (prevalence of illness) X (cost)
or [(prevalence rate of event)(average covered cost)]
A Rated Premi
Econ240 Exam 2 Review
Expected value- cost of benefit X probability it will occur
Two treatment options (cost utility ratio):
o Find 4 conditional probabilities.
o Use the conditional probabilities to find the expected value of the cost of
treatment one:
Econ 240: Quiz 1 Review
The quiz will be 15 multiple choice questions, and you will have one hour to complete it.
Be able to calculate:
1. An opportunity cost (Loss Gain)
2. A price elasticity (%Quantity %price), and whether it is elastic or inelastic
Rec