Skeleton Notes #2 Flashcards
models and individuals goals and contraints
the grossman model
the goal of the individual is:
to maximize utility
happiness, well-being
utility
how do we maxmize utility
increasing h and z
h represents _______. we buy ______________ to increase h.
health
m goods/services
z represents ________. we buy ________ to increase z.
other goods/services
j goods/services
although both h and z increase utility they show _____________
diminishing marginal activity
what is an example of having diminishing marginal utility in h goods
overuse of vitamins, medicines, antibiotics
the production of health (and z) requires two things
time
income/resources
formula for total time:
t^s + t^w + t^h + t^z
income equals:
wage x time working
the less time i spend ___- the more time i can _____ and thus make more _____ and thus invest in things that improve my ____ which should help lower the time i spend _____-
sick
work
income
health
sick
draw a time tradeoff graph (people have different preferences and constraints) in which person 1 is sick a lot and person 2 is healthy. they both make 10 an hour
-
draw a z-h production possibility frontier (ppf) of a low income country vs a high income
-
for the time tradeoff model, increases ___ allows for more time on ____ and ____ which allows for higher _____
health
work
z
utility
Becker and Grossman applied tools of _____ to human decisions on education and health
finance
health acts as three types of goods in the grossman model
health is both a consumption good, as we gain utility from it
health is a production good, and increases our ability to earn higher incomes
health is a form of wealth capitol, investments yield returns
in order to maximize lifetime utility, we can increase the stock of health capitol by ______
adding to it, with flows such as exercise and healthy behaviors
we can lose the stock of capital by _____
not properly taking care of it;
smoking, eating doritos, unhealthy behavior
