Under the new Health Care program US citizens are required to purchase a minimum level of health in Show more Under the new Health Care program US citizens are required to purchase a minimum level of health insurance say x i. 1. In a two-way diagram with health insurance on the horizontal axis and all other goods on the vertical axis explain how the health care reform may have affected the utility of a US citizen. Please discuss according to where her consumption bundle lied prior to the reform. Be sure to identify the new budget set taking due account of the new Health Care program. You can assume that the prices of insurance and other goods are unaffected by the reform. An objective measure of the loss in utility of those citizens who lose from the reform would be the increase in income that would be required for them to be able to reach their initial utility level while still purchasing the minimum amount of insurance. 2. Does this measure correspond to the concept of compensating or equivalent variation? 3. Explain how to identify this increase in income graphically. Show less
