Applying the concept of diminishing marginal utility

Assignment Help Business Economics

Reference no: EM13800522

The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on:

mental health therapy due to its higher marginal return rate.

elective surgery due to its lower marginal return rate.

both programs, which have the same marginal return rate.

neither can be compared by measuring marginal utility.

Reference no: EM13800522

Questions Cloud

What is the percentage return on your investment : You bought a call option with a strike price of $35. What is your total payoff on this option contract if the underlying stock is selling for $36.70 on the option expiration date? You purchased a call option with a $22.50 strike price and a call prem..

Cost of child-care is equivalent : Frank is a single-father with one child. The cost of child-care is equivalent to $150 per day. When Frank works, he receives an hourly wage of $20. In addition he has $150 of non-labor income per day. He sleeps 8 hours a day. Given these constraints,..

Organized into mainly profit-center divisions : A large electronics company is organized into mainly profit-center divisions. The components division and the consumer electronics division are profit-center divisions of the company. The consumer electronics division assembles components into device..

Incentive plan align the employees incentives with the firms : Part of a worker’s pay on an automobile assembly line is based on the number of cars in a pay period that come off the worker’s line and pass inspection. The remaining portion of the worker’s pay is an hourly wage that is fixed and only depends on th..

Applying the concept of diminishing marginal utility : The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month ..

Substitution and income effects of a change in price of good : Substitution and income effects of a change in price of a good may be used to explain the:

Submitted bids to develop a new video display technology : Two competing companies have submitted bids to develop a new video display technology. The yearly development cost of Alpha expressed in actual dollars will be $150,000 the first year and increase by 4% per year over the five year contract. Beta has ..

Determine apples optimal output : Consider the market for music downloads. The market demand curve is given by P=10-(1/6)Q. Where Q is the number of downloads sold per hour and P is the price per download. Apple is the dominant firm in this market with constant marginal costs MC=6.

Successfully collude to fix price at profit maximizing level : The demand curve for higher education in Tallahassee is P=120-2Q. Assume the only two colleges in town are FSU and FAMU. Each university faces the cost function TC=6Q. Both colleges get together and successfully collude to fix price at a profit maxim..

User Account

All Pages