Hillary Has an Initial Endowment of $500 and Is Interested

question 49

Essay

Hillary has an initial endowment of $500 and is interested in two things: how many visits she can make to the doctor and how much money will be left over to spend on other things.When a trip to the doctor costs $60, Hillary sees the doctor 2 times.After health care reform, a visit to the doctor will cost $10 but her taxes will rise by $100.
a.Explain what conditions are necessary for Hillary to be made better off by health care reform.
b.Is it possible to tell whether Hillary has been made better off with the given information?
c.Explain what conditions are necessary for Hillary to be made worse off by health care reform.
d.Is it possible to tell whether Hillary has been made worse off with the given information?

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Definitions:

Secondary Effects

The indirect impact of an action or policy, which may occur as a ripple effect beyond the immediate or primary effects.

Unintended Consequences

Are outcomes that are not the ones foreseen or intended by a purposeful action, often revealing a discrepancy between the intended result and actual results.

Economic Change

The process through which a country's economy grows, evolves, or transforms due to various factors such as technology, policies, and market conditions.

Incentives

Motivations or rewards designed to encourage specific behaviors or actions, often used in economic, workplace, or educational contexts.