Question

In general, the optimal amount of medical care is

a)as much as one can afford

b)enough to stay healthy

c)the quantity at which the total cost of the care equals its total benefit

d)the quantity at which the marginal cost of the care equals its marginal benefit

Answer 1

Assuming that We need to select among option a,b,c,d.

The optimal amount of medicare should be measurable so option a and option b, is eliminated as they cannot be quantifies.

coming to option C, it doesnt capture the marginal benefit nad the cost. It only gives the Total numbers which wont reflect the optimal level where any marginal benefit is exhausted.

This is captured by option D. Optimal amount can be determined by equating marginal benefit to the marginal cost. Over here we get to understand that the marginal benefit for the medical care is eualt to the marginal cost of it. The we derive the optimal amount of it.