# Demand for health capital; consumer choice; market equilibrium analysis

FratBro23
Category:
Economics
Price: \$15 USD

Question description

DRAW BIG GRAPHS TO IMPROVE CLARITY

1. Suppose that Martha’s income is \$40,000 per year.  She can spend it on health care visits, which cost \$80 per visit, or on groceries (standing for “all other goods”), which cost \$100 per bag of groceries.  Draw Martha’s budget constraint.  Using indifference curves, show Martha’s optimum if she buys 300 bags of groceries per year.
2. Suppose Martha’s income rises to \$42,000 per year, and that she increases her consumption of health care visits by five visits.  Using the graphs for Question 1, draw the new equilibrium.  What is her income elasticity of demand for health care visits?

(Top Tutor) Daniel C.
(997)
School: UIUC
Studypool has helped 1,244,100 students

1831 tutors are online

### Related Economics questions

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors