Question

Improvements in quality of medical procedures often mean that cost per unit of output decreases, quality of life is improved; however, total costs to society increase. This seeming paradox: A. is due to the law of diminishing marginal returns B. is due to economies of scale C.is the result of diseconomies of scale D. is explained by the fact that more people will demand the treatment if it increases life expectancy or quality of life

Answer 1

Improvements in quality of medical procedures often mean that cost per unit of output decreases, quality of life is improved; however, total costs to society increase. This seeming paradox is explained by the fact that more people will demand the treatment if it increases life expectancy or quality of life.

Everyone wants to maximize their time on Earth, so, if there is an improvement in the medical procedure, i.e. it increases the life expectancy by reducing the cost per unit of output, then more people will demand the treatment (for a better life) and thus the total cost to the society will increase.