Question

In Grossman’s model of health investment, demand for medical care: ⦁ Increases with education ⦁ Decreases...

In Grossman’s model of health investment, demand for medical care:

⦁ Increases with education

⦁ Decreases with age as health becomes more costly

⦁ Decreases if technology increases

⦁ Increases with demand for health

Homework Answers

Answer #1

The Grossman model of health is a model for studying the demand for health and medical care. In this model, health is a durable capital, it is inherited and decreases over time. Investing in health is a form of medical care purchase and other inputs and depreciation in interpreted as a natural breakdown of health over time.

One of the central predictions of Grossman's investment model is that education increase the efficiency by which individuals utilize inputs to increase health capital and there for increases the demand for health.

So the answer is :

Increase with education

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