Managerial Economics | Assignment | Doc

Running head: MANAGERIAL ECONIOMICS
Managerial Economics
Name of the Student
Name of the University
Author Note

MANAGERIAL ECONOMICS
1
Discussion
According to the given statement, medical cost has exceeded the growth rate of consumer
costs over the last couple years. The paper attempts to incorporate the indifference curve to
explain how the consumer’s budget and preference get affected as a result of the soaring medical
cost and proposes its remedial approaches to the Senator of the USA.
Figure 1: Trend in medical cost in the USA (2007 – 2020)
Source: (Statista, 2020)
Referring to the figure 1, medical cost has exhibiting an increasing trend since 2017 and
has recently achieved the growth rare of 6% in 2020. In general, the USA government spends
about 18% of GDP on the medical sector. Overstated administration cost, excessive treatment
cost and per capita medical spending are core factors behind this soaring medical cost.
According to the indifference curve, the utility driven from the medical treatment will be
compromised if opportunity cost is relatively high (Dickman, Himmelstein & Woolhandler,