Question

How does the law of diminishing marginal utility fit into an analysis of the demand for health care? Give some examples of decisions concerning health care where you personally are indifferent between getting medical care or doing without medical care.

Answer 1

In the health care, the law of diminishing marginal utility states that each successive incremental enhancement of health would generates smaller and smaller additions to total utility derived from it. Therefore the utility increases a diminishing rate in regard to the health. The Law of diminishing marginal utility fits into the demand analysis because it is based on values.

For example: Regardless of income, I would be not prefer to own more than one or two pair of prescription glasses because with each purchases of an additional pair of glasses it's utility becomes smaller. In a similar manner a patient like me has to take medicine as per the prescription. An excess of medication can result to physical harm and serious side effects.

In my personal life I had been indifferent between getting medical care or doing without medical care while when I was to be operated for a laser eye surgery to correct my eye vision. Since I am at a higher risk for complications and at lesser chance to be successfully treated with the eye surgery thus I am at dilemma on whether getting medical care or doing without medical care because the procedure has negative or no utility.