Question

Consider the relationship between health and income per capita. (scroll down for more info)

a. Draw a well labeled graph showing the relationships explained between the two variables. Identify the point of equilibrium. Which curve is going to be steeper and why?

b. Due to the ongoing pandemic 2 features have affected every economy.

• Average health condition has deteriorated. Which of the curves will be affected and in which direction? Explain your answer.

• Due to staggered progress of research and development, productivity of resources has been adversely affected. Which of the curves will be affected, in which direction? Explain your answer.

Use a new well labeled graph and show clearly the changes to the equilibrium condition based on the above 2 features. Your graph must clearly show the change in the new equilibrium as a result of combination of both the features occurring simultaneously.

SIDE NOTE: This course is called economic development and this question is regarding the role of human capital: h - health and y - income ( y(h) and h(y) ) the relation b/w health and income in the economy.

Answer 1

a. Draw a well labelled graph showing the relationships explained between the two variables. Identify the point of equilibrium. Which curve is going to be steeper and why?

There is a robust high quality correlation among fitness and GDP. Countries with higher health fame tends to have better earning than nations with worse fitness reputation, a courting called the “Preston curve.”

Figure suggests the Preston curve for lifestyles expectancy at delivery (vertical axis) and on real according to capita GDP in 2010 US dollars (horizontal axis) had been available for 2015 (purple factors) and 1960 (blue points). The discern suggests that health and income are definitely correlated across countries in each years and that both lifestyles expectancy and earnings improved between 1960 and 2015. As far because the convergence among poorer and richer nations is involved, convergence in life expectancy at birth has progressed quicker than has in step with capita GDP.

The Preston curve suggests that individuals born in richer nations, on average, can assume to live longer than the ones born in terrible international locations. However, the hyperlink among income and lifestyles expectancy flattens out. This way that at low ranges of per capita income, further increases in profits are associated with huge gains in existence expectancy, however at excessive ranges of profits, improved profits has little associated alternate in life expectancy. In other words, if the relationship is interpreted as being causal, then there are diminishing returns to income in terms of life expectancy.

b. Due to the ongoing pandemic 2 features have affected every economy.

Average health condition has deteriorated. Which of the curves will be affected and in which direction? Explain your answer.

A deep recession or despair would bring an inevitable deterioration in public health along with financial ache. It might push us backward down the Preston Curve, which demonstrates that existence expectancy varies without delay with earnings level: rich societies are enormously healthy, poor ones less so.

Due to staggered progress of research and development, productivity of resources has been adversely affected. Which of the curves will be affected, in which direction? Explain your answer.

Answer

New Preston curve advocate in essence that at low levels of consistent with capita profits, further will increase in profits cause massive gains in lifestyles expectancy. But at better tiers of profits, improved incomes in line with capita led to an awful lot smaller gains in durability. Accelerating economic development from low starting bases (poverty) consequently benefited now not simply average family incomes but had drastic influences on existence expectations too.

Use a new well labelled graph and show clearly the changes to the equilibrium condition based on the above 2 features. Your graph must clearly show the change in the new equilibrium as a result of combination of both the features occurring simultaneously.

Answer

Improvements in healthcare technology shift the Preston Curve upwards. In panel A, the brand new generation is similarly relevant in all international locations irrespective of their degree of profits. In panel B, the brand new technology has a disproportionately larger effect in rich countries. In panel C, poorer international locations gain greater.