Question

This is in Principles of Microeconomics. Prepare a brief reflection paper (300-350) that discusses the two " Thinking Critically" questions. 1. One key economic idea is that people respond to economic incentives. What economic incentives are Google and Novartis responding to? 2. Some diabetic patients need to monitor their condition by pricking their finger for blood to check blood sugar levels. If these patients could instead use the smart contact lens, it could improve the effectiveness of monitoring and, therefore, treatment. Develop an economic model to analyze the relationship between using the smart contact lens or the finger- pricking method of monitoring blood sugar levels and the number of diabetes-related deaths in the United States. Use information from the article to explain the steps you would take to develop this model. Found in Microeconomics sixth edition on page 20-21.

Answer 1

People indeed respond to economic incentives .Being rational in approach , google and novartis are responding to economic profits .The profits which incentives these agents to work and supply there service accrues to them. They are maximising in . nature with view of increasing sales and capturing the market share. The incentives of growth , innovation allows them to generate more profit.

Setting up the model

.1setting up the regression eqn

S = a - bx +e

The abve equation states that as smart contact lens in used as a technique , no of deaths decrease due to effective and better treatment.

2. Testing the null hypothesis

ho= 0 (no impact of smart lens on no of deaths)

h1#0 (there is a impact....)

3 .Taking the sample and testing it

t= x- mean/ sample std deviation

4. USING RULE OF THUMB AT a = 0.05

5. comparing the calculated value with table value of T , and thereby rejecting the null hypothesis if Tcal> Ttab

6. interpretation.