UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR

UNIVERSITY EXAMINATIONS 2010/2011 ACADEMIC YEAR

3rd YEAR SEMESTER EXAMINATIONS FOR THE DEGREE OF

BACHELOR OF ARTS

COURSE CODE/TITLE: AEC 305: HEALTH ECONOMICS

END OF SESSION III DURATION: 3 HRS

DAY/TIME: THURSDAY 8.00AM – 11.00AM DATE 05.12.2013 (PL3)

Instructions
Answer question one and any other three questions

Question one
a) The table below shows a hypothetical demand schedule for GP services in Narok town
where there is no free health service.

Prices of GP Quantity of GP consultations

consultations (K£) demanded per month
0 600
5 400
10 150
15 100
20 90

i) Draw a demand curve for GP services using this information. 4mks

ii) If the price of a consultation is K£5, what is the total amount that people will spend on
consultations? 2mks
iii) If the price of a consultation rose from K£10 to K£20, what would happen to the quantity
demanded? 2mks

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 b) Table 2 below shows a hypothetical supply schedule for GP services in a town where
there is no free health service.

Price of GP Quantity of
consultations consultations GPs are
(K£) prepared to supply per
month
0 0
5 40
10 80
15 100
20 150

i) Draw a supply curve for GP services using this information. 4mks

ii) If the price of consultations rose from £5 to £15, what would happen to the quantity of
consultations GPs are prepared to supply? 2mks

c) Use the information in Tables 1 and 2 to draw a market diagram for GP services. 5mks
i) What is the equilibrium price and quantity? 2mks
ii) How much revenue are doctors then receiving? 4mks

Question two
Which do you think is more important - that we treat all patients with kidney failure in the same
way or that we make sure that we devote more health care resources to kidney failure than to
plastic surgery? Justify your answer. 15mks

Question three

a) Does society receive externality benefits from all kinds of health care? 4mks
b) Analyse why the government might launch a health campaign to persuade people to drink less
alcohol. 6mks
c)Explain how a free market in health care might cause problems for the control of infectious
disease. 5mks

Question four

Do you think that the rich should contribute more to the financing of health care than the poor?
Justify your answer. 15mks

Question five
List and explain all the factors that lead to a demand for health care services. 15mks

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