Chapter 30: Q.c - For Critical Thinking (page 684)
Who provides the more than $100 billion that Medicare spends on prescription drugs each year?
The taxpayers provide the money.
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Estimates indicate that in recent years, the poorest 40 percent of the population earned about 15 percent of total income in Argentina. In Brazil, the poorest 40 percent earned about 10 percent of total income. The next-highest 30 percent of income earners in Argentina received roughly 25 percent of total income. In Brazil, the next-highest 30 percent of income earners received approximately 20 percent of total income. Can you determine, without drawing a diagram (though you can if you wish), which country's Lorenz curve was bowed out farther to the right?
Suppose that a group of physicians establishes a joint practice in a remote area. This group provides the only health care available to people in the local community, and its objective is to maximize total economic profits for the group's members. Explain how the price and quantity of health care will be determined in this community. (Hint: How does a single producer of any service determine its output and price?)
Identify the key determinants of income differences across individuals and discuss theories of the desired income distribution.
What do you think motivates proposals to require sellers of disposable diapers to print messages on diapers encouraging parents to tell stories for or read to their babies or young children?
Suppose that a government agency guarantees to pay all of an individual's future health care expenses after the end of this year so that the effective price of health care for the individual will be zero from that date onward. In what ways might this well-intended policy induce the individual to consume "excessive" health care services in future years?
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