Economics of Health Care Assignment Example | Topics and Well Written Essays - 1250 words

Economics of Health Care - Assignment Example The statement is false because the incorporation of a subjective utility weight in the calculation of quality-adjusted life years does not affect the question of allocative efficiency. An allocative efficiency deals with the allocation of resources; on the other hand, cost-utility measures the quality of adjusted life years. The use of cost-utility will, therefore, be inappropriate when subjective utility weight is incorporated. According to Hurley (2010, 109), to address the question of allocative efficiency, it requires the use of the cost-benefit analysis. This is because the potential Pareto criterion method is required for the analysis (p.109). The result is negative. This means that the annual costs for carrying out the exercise are very expensive compared to the benefits that the university gets in terms of savings. Basing on the cost-benefit analysis, it is recommended that the university does not carry out the vaccination process. This is because of the high cost of this process. The program does not pass the cost-benefit analysis test because it gives a negative net benefit. Negative net benefit means that the implementation of the exercise would result in losses rather than gain in comparison to the effort used. The theory states that education induces greater taste for health. This means that health and education are causally related in instances where a third factor is missing. Focusing on the graph, it shows that both a better taste for more education and higher levels of learning are caused by the introduction of a third factor such as time. In this case, the lower rate of time leads to a greater investment in both variables resulting in a negatively sloping graph. For this graph, the two are not causal but have a correlation brought in by the introduction of a third factor that affects both variables. Â