Question

People looking for medicine to relieve pain often find that there is an inherent trade-off between safety and effectiveness. Those drugs that are very effective at relieving pain, like prescription opioids such as oxycodone and hydrocodone, carry the risk of significant side effects. Other drugs, such as the non-steroid anti-inflammatory drugs (NSAIDs) like ibuprofen, are very safe but not very effective at all at reducing pain.

Suppose you know the following:
• The individual always values making a drug safer; however, the incremental gain in effectiveness decreases as the safety level increases;
• The individual always values more pain relief; however, the incremental gain in safety decreases as the pain relief increases;
• If the options are opioids or NSAIDs, he chooses opioids.
• Marijuana’s safety is halfway between the high safety of NSAIDs and the low safety of opioids. It’s effectiveness at pain relief is uncertain.

a. Draw a graph with the attributes (safety and pain relief) on each axis. Draw indifference curves to show that the individual prefers opioids over NSAIDs.
b. Define the marginal rate of substitution in this context. Is the MRS higher for NSAIDs or opioids? Explain how you know.
c. An opponent of medical marijuana makes the argument that marijuana should not be legal since it isn’t as effective as opioids at pain relief. Does marijuana need to be as effective as opioids in relieving pain in order for the individual to prefer it? Indicate on the graph the minimum level of pain relief that marijuana needs to achieve in order for it to be preferred to opioids. Label the difference between this minimum and the pain relief achieved from opioids as A.
d. A proponent of medical marijuana believes that marijuana may help society, especially if the drug regulators ban opioid use. Indicate on the graph the minimum level of pain relief that marijuana needs to achieve in order for it to be preferred to NSAIDs. Label the difference between NSAIDs pain relief and this minimum to make marijuana preferable over NSAIDS as B.
e. Compare the difference A you found in part c to the difference B you found in part d. Why is A so much bigger than B?

Answer 1