University of Wisconsin
Department of Economics
Economics 236: Health Economics and Policy
Korinna K. Hansen
Group Assignment 1
Due Date: Monday, Sept. 25
Reading Assignment: Phelps, Chapter 4
Problem Assignment:
Here are some critical questions for our class discussion regarding the Demand for
Medical Care. For each one of the following questions you should be able to
communicate to an audience all important relevant information in a well-organized and
concise way. Make sure that you are ready to present enough detail.
1). The determinants of demand for medical care: What changes the demand for medical
care? Be prepared to present a long list of determinants and explain in a graph how each
one affects the demand. Distinguish between movement along the demand curve and
shifts of the whole curve.
2). The aggregate demand curve for medical care: How do we derive the aggregate
(joint) demand when we have the individual demand curves for two individuals? Be
prepared to explain the horizontal addition of the two curves with a graph.
3). Healthy versus sick: Explain how a sudden illness can change the shape of the
indifference curves for medical care and all other goods. Draw two intersecting
indifference curves and explain which one would belong to the healthy and which one to
the sick person and why. (Tricky question! Hint: Consider how much the sick and
healthy individuals are willing to give up in medical care to get an additional unit of all
other goods.)