Identify an issue in healthcare where the income effect has a huge real impact on individuals’ lives.
Consider the following scenario: “The Jones family has no medical insurance and also has a very low demand (essentially zero) for an expensive medical service. However one of their children is diagnosed with a condition which now requires this service on a weekly basis.” Identify all of the concepts which are relevant to this scenario and explain and/or illustrate the Jones family’s circumstances using the concepts.
Consider the demand for a medication which is currently under patent protection. Describe, using all relevant concepts from the chapter, what happens when the patent protection ends and a generic drug with identical medical properties becomes available at 1/4 of the price of the original drug.
Identify a good or service which you purchase on a regular basis. Ask yourself and answer honestly how much more you would actually be willing to pay for that good or service. Then, based on the frequency of the purchase, calculate your consumer surplus. Don’t you feel better?
5. Why do we add consumer’ demand curves togethere horizontally to get the marked demand curve?

6. What happens to total utility as marginal utility deminishes (as one consumes more of a good)?

7. What is the substitution effect of a price increase?

8. Bill has spent $300 for a video recorder. He would have been willing to pay $500 . What is his consumer surplus?