Guidelines
Health Economics 1, POPH90094
One Minor Assignment (20%)
1. Assignment Aims: ..............................................................................................................1 2. Due date ............................................................................................................................1 3. Word limit ..........................................................................................................................1 4. General guidelines .............................................................................................................2 5. Referencing........................................................................................................................3 6. Requestions for extensions.................................................................................................3
1. Assignment Aims:
• Ensure students have an incentive to carefully review and consolidate material covered during the first few weeks of the course – specifically the theory of demand and supply.
• Help students gain familiarity with using economic terminology.
• Ensure students have a solid understanding of some core concepts of health economics at
a stage when there is an opportunity to address any problems with understanding.
• Provide an opportunity to apply economic theory to a practical public health question, to
demonstrate the potential clarity that economic tools and approaches bring to the understanding of the topic – and also potential limitations of the economic theory.
2. Due date
• Due Tuesday 9 April (end of the working day 5.59pm), submitted via Canvas.
• Marks will be deducted for late submission in line with MSPGH policy.
3. Word limit
• The total word limit for the assignment is 1000 words (excluding tables, any questions from the assignment you reproduced and references)
• Marks will be deducted for exceeding the word limit by 10% in line with MSPGH policy.
• You are encouraged to write concisely, using the economic terminology correctly.
4. General guidelines
• You may discuss these questions with other HE1 students – in fact discussion and explaining concepts to others is a great way to learn yourself. However, you must write the final response independently and in your own words.
• You are not required to introduce empirical evidence to support your answers. If you do so, it must be correctly referenced (see below).
• Always label diagrams fully and give a brief interpretation of diagrams in the text. You may produce diagrams either electronically or by hand.
• If you are using acronyms, please show them in full the first time they are used in a question.
• Please define key terms in your own words.
• You are expected to know, and comply with, UoM policy on plagiarism. See
• For this assignment you cannot use artificial intelligence software such as ChatGPT or QuillBot to generate material for submission. Submitting material generated in this way as your own work (i.e. ideas, research and/or analysis) is considered academic misconduct. [This is important so please ask Sabine if you are ever uncertain if you comply.]
• Always write in your own words and use formal language as appropriate to academic work. The Turnitin score will be considered in the marking of the assignment – you can check this yourself as you submit.
• You must use the answer template document provided for your submission. You can only submit a word document. Please:
a. Ensure that the answer to each question (not sub-part) starts on a new page.
b. Write your name and student ID on the title page.
c. Write your student ID in the header so that it appears in the right-hand corner of
each page.
d. Report the word count for each question as well as the total for the assignment in
the table provided on the title page 1.
e. Do not copy the question into the template document; this document should only
contain your answers.
f. Use double-spacing and Aptos font, Size 12.
g. Use Australian English spelling.
h. Submit via Turnitin with filename: 2024_HE1_Last name_First name
5. Referencing
• It is not expected that you will need to use many references in this assignment.
• You do not need to reference core aspects of accepted economic theory – you should not
reference lecture slides.
• If you decide to use references, please use APA 7 referencing style and include doi or
weblink to the reference. Go to the university’s Re:cite website for information about this
and other referencing styles (https://library.unimelb.edu.au/recite).
• References do not count as part of the word limit.
• Always reference the source of data such that it can be traced – if you cite a website also
give the date accessed.
• Use “ “ when using a direct quote and include a page number in the reference.
• Try and put things in your own words (with citation) unless the way in which the authors say
it is so good it is worthy of a direct quotation.
• Referencing should be sugiciently clear that the reader to tell when an idea is yours versus
when it is being appropriately attributed to someone else.
6. Requestions for extensions
• The subject coordinator (Sabine) can issue up to 10 working-days extension where the capacity to complete work has been agected by significant factors beyond the student’s control and that can be verified by supporting evidence.
• If you need an extension, please email Sabine with information listed below and include supporting documentation:
- Student name:
- Student number:
- Subject Code and Title:
- Assessment title:
- Assessment due date:
- Reason for the extension request, including a statement of the impact of the
circumstances on your ability to complete the work:
• You must apply for an extension at least 24 hours before the deadline, so by 5.59pm on Monday April 9.
• If you require a longer extension, you can apply for Special Consideration:
• For more details you can see the MSPGH policies on the Canvas MSPGH Student Community.
• Once the marks and mark scheme have been released to students it is no longer possible to accept submissions. Where extensions greater than 10 days are requested, this may require a digerent assessment.
MINOR ASSIGNMENT QUESTIONS
There are 5 questions each worth 20 marks = Total marks 100
Question 1
Consider a bakery that uses two inputs, capital and labour, to produce bread. The baker needs to decide about the long run about the optimal combination of inputs to minimise the bakery’s costs for a given output, 800 loaves a day.
a) Demonstratetheoptimalcombinationofinputsthefirmwoulduse.Plotcapital(K)
on the y-axis and labour (L) on the x-axis. [6 marks]
b) Explainwhytheoptimalcombinationofinputsiscost-eQicientandwhyitis
technically eQicient. [4 marks]
Now consider that the baker is faced with an increase in wages in the long run. c) Useadiagramtoshowwhatthenewoptimalcombinationofinputsis.
i) What happens to the cost of production?
ii) What happens to the amount of labour used?
iii) Whathappenstotheamountofcapitalused?
iv) Willproductionbecomemore,orlesslabour-intensive?
[10 marks – 6 marks for the figure, 4 marks for subparts i) through iv)]
Question 2
The local council decides to charge a higher rent to the food truck selling milkshakes at the local pool.
a) Whathappenstothepriceandquantityofmilkshakesatthelocalpool?Usesupply
and demand diagram (fully labelled) to explain the process of change from the old equilibrium to the new equilibrium. [8 marks]
As a result of an increase in demand, the price of a milkshake increases from $4.50 to $5. The quantity of milkshakes demanded at the pool per day falls from 104 to 84 following the price increase.
b) Giveashortdefinitioninyourownwordsofpriceelasticityofdemand?[2marks]
c) Calculatethepriceelasticityofdemandformilkshakesatthepool?[5marks] d) Isthedemandformilkshakespriceelasticorpriceinelastic?Explain.[2marks] e) Givethreeplausiblereasonsforyouranswerto(d).[3marks]
Question 3
a) Supposethegovernmenthasdecidedtointroduceasubsidyforforpilatessessions with a certified pilates instructor. Describe [using a diagram and a brief explanation, including stating any assumptions about price elasticity of demand and price elasticity of supply] what would happen to:
i) the quantity sold of pilates sessions
ii) the price of pilates sessions
iii) theproducersurplus
iv) theconsumersurplus
v) government revenue or expenditure
vi) overallwelfare
[15 marks]
b) HowelsecouldthegovernmentintervenetoimprovetheaQordabilityofpilates sessions? Briefly discuss how the economic outcome of this intervention compares to the outcome of implementing a subsidy? [4 marks]
Question 4
a) Draw(andfullylabel)indiQerencecurves,aswellasarrowsindicatingthedirection in which the individual’s utility is increasing, of Emma’s consumption preferences for two products:
i) Emma always eats two cookies when she drinks her latte.
ii) Emma loves brownies but dislikes (but will consume) cronuts.
[ 4 marks - 2 marks for each subpart]
Suppose that Dexter’s income is $2100 per month. He purchases only two goods, food (F) and clothing (C). The price of food is $3 per unit. The price of clothing is $150 per unit. Assume diminishing marginal utility of consumption of both food and clothing.
b) OnadiagramshowDexter’sbudgetconstraint,indiQerencecurves,andtheoptimal consumption bundle. [6 marks]
c) Whatisthemarginalrateofsubstitutionbetweenfood(F)andclothing(C)atthe optimum consumption bundle? Explain why? [4 marks]
d) Thepriceoffoodhasincreased,soDexterconsumeslessfood(F).WhattwoeQects lead to the change in consumption? Name and give a short definition of each using your own words. [6 marks]
Question 5
a) Considerapharmaceuticalcompanythathasbeengranteda25-yearpatentfora unique drug to treat cancer that improves life expectancy of cancer patients.
i) Show using a diagram the outcome that maximises profit for this pharmaceutical company. [4 marks]
ii) Describe how this outcome is diQerent from the market equilibrium for a generic drug in a perfectly competitive market and explain why? [3 marks]
iii) Takingyouranswerfori)andii)intoaccount,brieflymotivatewhyyouthink patent protections for pharmaceuticals are or are not beneficial to society? [3 marks]
b) Considerthemarketfordietarysupplements.Explainusingtwodiagramswhyafirm like Suisse can make a profit selling its multi-vitamin in the short run but does not make profits in the long run. How does the outcome compare with that of a perfectly competitive market? [10 marks – 6 marks for the diagram, 4 for the explanation and comparison]
