Question

Which of the following is a characteristic of the Grossman model?

a.) Health is a capital good that lasts more than one period

b.) Health is a cosumption good

c.) Health is an investment good

d.) all of the above

Answer 1

Option d is correct answer. According to Grossman model, health is a capital good that lasts more than one period and health is both consumption good and investment good Initially an individual is endowed with a certain amount amount of capital, which depreciates over time. but it can improves by investments like medical care, diet , exercises. Therefore, the health level depends on the amount of resources that individual should allocates to production of good health. Individual can improve their health by investing in their health through education, training and health