1. What is the likely consequence on the U.S. market for tobacco products of the event listed below?
a. Does the supply curve or the demand curve shift? In which direction?
b. State whether the equilibrium price and quantity increase, decrease or stay the same.
c. Show the changes using a standard demand/supply diagram.
i. Sixteen states sue the major tobacco company for billions of dollars because of tobacco-related costs in their Medicaid program.
What are the likely consequences of the following events in the U.S market for cosmetic surgery?
a. Does the supply curve or the demand curve shift? In which direction?
b. State whether the equilibrium price and quantity increase, decrease or stay the same.
c. Show the changes using a standard demand/supply diagram.
ii. Health insurance coverage is expanded to cover all elective procedures, such as tummy tucks, nose jobs, and liposuction.
iii. The FDA (Food and Drug Administration) takes all silicone-based implants off the market fearing a connection with certain connective-tissue diseases.
iv. Personal finance companies starts a nationwide lending program for cosmetic procedures not covered by health insurance.
v. Medical malpractice insurance premiums increase for plastic surgeons.
vi. Medical schools announce that residents in plastic surgery can be licensed after only five years instead of the current seven years.

2. Congratulations! Upon graduating, you accept a well-deserved job with Peachtree Consulting. Your first job involves a consulting gig with a state subcommittee on health care issues. The senate health care subcommittee is considering the expansion of two existing public health programs. One program concerns additional funding for nursing homes around the state. The other program involves additional funding for community health centers around the state. In both cases the funding is supposed to be used to attract more nurses for expansion purposes. Your job involves the following tasks:
a. Draw and use a production possibilities curve to graphically show and verbally explain to the subcommittee members the opportunity cost at a point in time of expanding any one of the programs, assuming that both programs are initially operating efficiently. Be sure to correctly label the axes and all the points. Refer to the points on the graph in your explanation.
b. Use the production possibilities curve to graphically show and verbally explain how one or both programs could be expanded if some inefficiency or slack initially exist in the overall public health system. Refer to various points on the graph in your explanation.
c. Use the production possibilities curve to graphically show and verbally explain how both programs could be expanded if growth is expected for the public health care system. Refer to points on the graph in your explanation.

3. Indicate whether the following statements are positive or normative statements (20 points)
a) According to government statistics, in 1989, 7.2 deaths per 100,000 residents were alcohol induced. To decrease this number, the government should impose higher taxes on alcohol.
b) The high cost of providing healthcare for their employees is a major reason that U.S. firms are not competitive with their foreign counterparts.
c) Individuals born with certain genetic defects that predisposes them to higher medical care spending over their lifetimes should be charged higher health insurance premiums than people without those defects.
d) The government should enforce minimum prices for beers and lagers sold in supermarkets and off-licences in a bid to control alcohol consumption
e) Smokers should pay a higher health insurance premium than nonsmokers
f) According to Tosteson et al. (1990), a 25 percent drop in the number of people who smoked in 1990 would reduce the incidence of coronary heart disease by 0.7 percent by the year 2015.
g) In the long-run, employers bear the primary burden of their contributions to employees health insurance
h) The United States spends more money per capita on medical care than any other country in the world
i) Congress should guarantee universal insurance coverage by requiring all employers to provide health insurance to their workers.
j) Government provided health care increases public expenditure

4. Assume a market for knee surgery. Let the demand for knee surgery be the following:
P = 2000 â€“ 4Q.
Let the supply for knee surgery be the following: P = 1000 + Q.
a. Find the equilibrium price and quantity
b. Graph the supply and demand curves

1. What is the likely consequence on the U.S. market for tobacco pr...