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    Health production functions

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    A)Assume that health production is subject to diminishing returns and that each unit of health care employed entails a constant rate of iatrogenic (medically caused) disease. Would the product of health function eventually bend downward? A Briefly Explaination.

    b)What evidence is there to suggest that the most of the developed countries are on the "flat of the curve" in health production? Is a typical developing country likely to be on the flat of its health production function? Briefly Discuss the differences.

    c)What role did public health play in the historical decline in mortality rates?

    d)Suppose you were hired as an adviser to a developing country and you were versed in the theory of production, the historical role of medicine, and the modern-day health production functions studies. Their government seeks advice on the wisdom of a relative emphasis on health and health investment versus other forms of economic investment. What would be your advice?

    e)Contrast technical and allocative efficiency. How can technical and allocative inefficiency in health care firms affect patient welfare?

    f)Which of the following types of technological change in health care are likely to be cost increasing: (A) threats of malpractice suits cause physicians to order more diagnostic tests on average for a given set of patient symptoms; (B) a new computer-assisted scanning device that enables physician to take much more detailed pictures on the brain: (C) the introduction of penicillin earlier in this century; (D) greater emphasis on preventive care? ....and why?

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    Solution Preview

    Diminishing returns on each unit of health care consumed will result in less and less benefit in terms of the health of the population. At the same time, each unit causes increases iatrogenic disease at a constant rate. Therefore, the curve begins to bend downward when the benefit of the next unit of health care consumed is less than the damage done by the iatrogenic disease.

    On the flat part of the health production function there will be no increase in longevity, or decrease in the percentage of the population suffering from disease, for each unit of health care consumed. Many developed countries are indeed seeing less and less benefit to spending more on health care. Developing countries are more likely to be in the upward sloping section of the health production function where each unit of health care spending results in a healthier population. This is because the easiest and cheapest means of increasing health, such as sanitation and vaccination, have ...

    Solution Summary

    Public health and the cost of health care