Part One (5 points) Market for COVID 19 Vaccines Price Quantity Demanded Quantity Supplied 0 400,000 0 $25.00 375,000 50,000 $50.00 200,000 75,000 $70.00 100,000 100,000 $90.00 50,000 200,000 $150.00 15,000 300,000 1. What is the market equilibrium price and quantity for COVID 19 vaccines? 2. At the price of 0, how many COVID 19 vaccines are consumers willing to take? 3. Does a shortage exist at a price of 0? If so, how much is the shortage? 4. Does a surplus exist at a price of $90.00? Is so, how much is the surplus? 5. If the government does not want there to be a shortage or surplus, what price should the government allow suppliers to charge for a COVID 19 vaccine? 6. What externalities exist in the market for COVID 19 vaccines? Use these externalities to explain why the government would sponsor (set the price at 0) for COVID 19 vaccines. 7. If a new vaccine is approved, what will happen to the equilibrium price and quantity of vaccines? Part Two (5 points) There are four major methods of economic evaluation used in health care decision-making. The four methods are the cost of illness studies, cost-benefit analysis, cost-utility analysis, and cost-effectiveness analysis. Please note that your textbook treats cost-utility analysis as a special form of cost-effectiveness analysis. You have been assigned to evaluate a new medication for disease X. I have purposely made up a disease to keep you from approaching this question as if you were looking a medical clinical trial for the effectiveness of the mediation. Your focus needs to be on how you would perform the economic evaluation of the medication. Write an essay in which you address the four questions listed below. The average length of the essay to answer this question should be at least one typed single-spaced page or two double-spaced pages. Which of the four types of economic evaluation would you use to perform your evaluation? What advantages does the type of evaluation you selected have over the other three for this study? What are some of the disadvantages or limitations of the evaluation you selected? What information would you need to gather to perform your evaluation? (Please remember you are doing an economic evaluation not a medical/clinical trial for a treatment.) Part 3 (5 points) Write an essay in which you address the following. The average length of the essay to answer this question should be at least one typed single-spaced page or two double-spaced pages. Demand studies in health care have provided estimates of both income and price elasticity. Estimates of income elasticity are usually above +1.0. Estimates of price elasticity typically range between -0.1 and -.75 (with hospital services at the lower end and elective services at the upper end). Write an essay in which you address the following questions. What information do these estimates convey? What does the price elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers decisions? What does the income elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers decisions?
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