UNder the concept of health as an investment, If market interest rates increase,
ID: 1257518 • Letter: U
Question
UNder the concept of health as an investment, If market interest rates increase,
an individual will put more resources to investing in health and this is represented by equilibrium health (H*) increasing
an individual will put less resources to investing in health and this is represented by equilibrium health (H*) increasing
an individual will put less resources to investing in health and this is represented by equilibrium health (H*) decreasing
an individual will put more resources to investing in health and this is represented by equilibrium health (H*) decreasing
none of the above
a.an individual will put more resources to investing in health and this is represented by equilibrium health (H*) increasing
b.an individual will put less resources to investing in health and this is represented by equilibrium health (H*) increasing
c.an individual will put less resources to investing in health and this is represented by equilibrium health (H*) decreasing
d.an individual will put more resources to investing in health and this is represented by equilibrium health (H*) decreasing
e.none of the above
Explanation / Answer
b) an individual will put less resources to investing in health and this is represented by equilibrium health (H*) increasing
With increase in interest rates, opportunity cost of investing money in health increases. Therefore, demand for health services will decrease and with decrease in demand, equilibrium price as well as equilibrium quantity will decrease.
b) an individual will put less resources to investing in health and this is represented by equilibrium health (H*) increasing
With increase in interest rates, opportunity cost of investing money in health increases. Therefore, demand for health services will decrease and with decrease in demand, equilibrium price as well as equilibrium quantity will decrease.
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