Think about the relationship between economic prosperity and life expectancy. Part 2 The size of the health care sector in a less developed country is ▼ the same as smaller than larger than the size of the health care sector of a developed country. Part 3 In particular, the size of the health care sector in a developing country Part 4 A. grows with economic prosperity as life expectancy increases. B. falls since the developing country depends more on the advanced countries for their medical needs. C. falls with economic prosperity as life expectancy increases. D. grows as the government provides more subsidy.
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Generally, as a country's economy grows and becomes more prosperous, its citizens tend to have better access to healthcare, leading to increased life expectancy. Show more…
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(Related to the Making the Connection on page 316) Think about the relationship between economic prosperity and life expectancy. What implications does this relationship have for the size of an economy's health care sector? In particular, is this sector of the U.S. economy likely to expand or contract in coming years?
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Suppose life expectancy in years $(L)$ is a function of two inputs, health expenditures $(H)$ and nutrition expenditures $(N)$ in hundreds of dollars per year. The production function is $L=\mathrm{c} H^{0.8} N^{0.2}$ a. Beginning with a health input of $\$ 400$ per year $(H=4)$ and a nutrition input of $\$ 4900$ per year $(N=49),$ show that the marginal product of health expenditures and the marginal product of nutrition expenditures are both decreasing. b. Does this production function exhibit increasing, decreasing, or constant returns to scale? c. Suppose that in a country suffering from famine, $N$ is fixed at 2 and that $c=20 .$ Plot the production function for life expectancy as a function of health expenditures, with $L$ on the vertical axis and $H$ on the horizontal axis. d. Now suppose another nation provides food aid to the country suffering from famine so that $N$ increases to $4 .$ Plot the new production function. e. Now suppose that $N=4$ and $H=2 .$ You run a charity that can provide either food aid or health aid to this country. Which would provide a greater benefit: increasing $H$ by 1 or $N$ by $1 ?$
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